Rolls-Royce Holdings plc Rolls-Royce continues Marine transformation (6891Q)
December 01 2016 - 5:00AM
UK Regulatory
TIDMRR.
RNS Number : 6891Q
Rolls-Royce Holdings plc
01 December 2016
1 December 2016
Rolls-Royce ACCELERATES TRANSFORMATION OF MARINE BUSINESS
THROUGH FURTHER RESTRUCTURING AND SIMPLIFICATION
Rolls-Royce has today announced plans to accelerate the
transformation of its Marine business as a result of continuing
weakness in the maritime market. Rolls-Royce's Marine business
supplies a range of technology and services to customers operating
merchant, offshore and naval vessels.
Planned measures include a further simplification of the
structure of the business, with a streamlining of the senior
management team, and a series of cost reduction initiatives which
will result in the loss of around 800 roles worldwide and an
estimated GBP45-50 million of annualised savings from mid-2017.
Costs of this restructuring are expected to be around GBP20
million, split between 2016 and 2017.
As part of the programme, investments are also being proposed to
establish an R&D centre for the development of new propulsion
products, and an expanded Services hub for Northern Europe, both in
Ulsteinvik, Norway. The organisational changes will also increase
the strategic focus on developing further electrical and digital
technologies as the maritime industry shifts towards a more digital
future where Ship Intelligence plays a greater role.
Today's proposals follow a series of cost reduction initiatives
carried out over the past three years to improve the affordability
and competitiveness of the Marine business. The proposed job
reductions are in addition to the reduction of 1,000 employees
announced in May and October last year. The Marine business
currently employs around 4,800 people in 34 countries.
In the trading update on 16 November, we highlighted that there
were no signs of a recovery in offshore oil & gas markets and
orders for new equipment remain very weak, resulting in
expectations of further revenue weakness for the business in 2017.
Service revenues have also been impacted by lower utilisation of
vessels.
Mikael Makinen, Rolls-Royce, President - Marine, said: "The
ongoing market weakness that has followed the dramatic fall in the
price of oil continues to have an adverse impact upon our order
book and profitability. We have made significant progress in
transforming Marine into a far more agile and simplified business
than we were and we have to take further steps to address our cost
base.
"Reducing our workforce is never an easy decision, but we have
no option but to take further action beyond the changes we have
made to date. This remains a fundamentally strong business, but we
need to overcome the immediate challenges and focus our investments
on the technologies that will shape our future growth."
Warren East, CEO of Rolls-Royce added: "I am very supportive of
Mikael and his team's proactive efforts to optimise our Marine
business in extremely challenging market conditions and at the same
time to target investment on future opportunities. The actions
being taken will enhance the competitive strength and resilience of
the business in what remains an attractive market for
Rolls-Royce."
About Rolls-Royce Holdings plc
1. Rolls-Royce's vision is to be the market-leader in high
performance power systems where our engineering expertise, global
reach and deep industry knowledge deliver outstanding customer
relationships and solutions. We operate across five businesses:
Civil Aerospace, Defence Aerospace, Marine, Nuclear and Power
Systems.
2. Rolls-Royce has customers in more than 150 countries,
comprising more than 400 airlines and leasing customers, 160 armed
forces, 4,000 marine customers including 70 navies, and more than
5,000 power and nuclear customers.
3. We have three common themes across all our businesses:
-- Investing in and developing engineering excellence
-- Driving a manufacturing and supply chain transformation which
will embed operational excellence in lean, lower-cost facilities
and processes
-- Leveraging our installed base, product knowledge and
engineering capabilities to provide customers with outstanding
service through which we can capture aftermarket value long into
the future.
4. Annual underlying revenue was GBP13.4 billion in 2015, around
half of which came from the provision of aftermarket services. The
firm and announced order book stood at GBP79.5 billion at the end
of June 2016.
5. In 2015, Rolls-Royce invested GBP1.2 billion on research and
development. We also support a global network of 31 University
Technology Centres, which position Rolls-Royce engineers at the
forefront of scientific research.
6. Rolls-Royce employs over 50,000 people in more than 46
countries. More than 16,000 of these are engineers.
7. The Group has a strong commitment to apprentice and graduate
recruitment and to further developing employee skills. In 2015 we
employed 228 graduates and 277 apprentices through our worldwide
training programmes.
For further information, please contact:
Investors:
John Dawson
Director of Investor Relations
Rolls-Royce plc
Tel: +44 (0)20 7227 9237
M: +44 7557 287101
jcdawson@rolls-royce.com
Media:
Richard Wray
Director of External Communications
Rolls-Royce plc
Tel: +44 (0)20 7227 9163
M: +44 7974 918416
richard.wray@rolls-royce.com
www.Rolls-Royce.com
This information is provided by RNS
The company news service from the London Stock Exchange
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