Rolls-Royce to cut up to 2,500 jobs as part of streamlining plans

Source: Sharecast

Rolls-Royce said the changes being proposed will remove duplication and deliver cost efficiencies.

"Our tight management of costs and headcount through 2023 has ensured that we have minimised the overall reduction in headcount," it said.

The company, which currently employs 42,000 worldwide, said the engineering technology & safety segments will come together as a single team responsible for product safety, engineering standards, process, methods and tools.

"It will also enable engineering talent and technology to be used more effectively across the business," it said.

The new segment will be led by Simon Burr, currently director of product development and technology, civil aerospace, who is joining the executive team with immediate effect. Chief technology officer Grazia Vittadini will leave the business in April 2024.

The plans include the creation of a new enterprise-wide procurement and supplier management organisation to support the consolidation of group spend, leverage scale and develop consistent best in class standards, Rolls-Royce said.

"As well as delivering savings, a greater focus on these key areas will lead to improvements in customer service, reducing supply chain delays," it said.

Chief executive Tufan Erginbilgic said: "We are building a Rolls-Royce that is fit for the future. That means a more streamlined and efficient organisation that will deliver for our customers, partners and shareholders.

"Our business is full of committed, talented people and I believe these changes will enable them to build greater capability in areas that are key to our long-term success. This is another step on our multi-year transformation journey to build a high performing, competitive, resilient and growing Rolls-Royce."

At 0855 BST, the shares were up 1.8% at 217.30p.

Victoria Scholar, head of investment at Interactive Investor, said: "Investors are welcoming its cost cutting plans which have lifted the stock in today’s session, extending its stellar year-to-date gain to almost 120%, making it a major UK outperformer, helping to reverse some of its long-term underperformance.

"Over the summer, Rolls-Royce reported a sharp jump in first half underlying profit and free cash flow, led by civil aerospace. Its transformation plan is faring well with improving operations, the post-pandemic rebound in international flying and increased defence spending.

"Things couldn’t be going much better for Erginbilgic, who took to the helm at the start of the year. For years, the engine maker failed to rev up investor confidence with the stock sliding from the highs in 2014 to the trough during the challenging pandemic period. Now Rolls-Royce is the best performing stock on the FTSE 100 over a one-year period, up over 200%."