Rolls-Royce Cuts Further 800 Jobs in Marine Business -- Update

(Updates with CEO comments and context on the cost cuts and marine business.)

By Robert Wall and Razak Musah Baba

LONDON--Rolls-Royce Holdings PLC (RYCEY) will reduce its marine division's workforce by a further 800 as part of a plan to reduces losses at the unit.

The British aircraft-engine maker said Thursday that this reflected the continuing weakness in the maritime market. The proposed reductions are in addition to the unit's 1,000 job cuts announced in May and October last year. The marine business currently employs around 4,800 people in 34 countries.

The company said its simplification of the business, senior management review and cost-reduction initiatives would save an estimated 45 million to 50 million pounds ($56 million to $62 million) on an annualized basis from mid-2017. The restructuring will cost GBP20 million upfront, split between this year and next.

"The actions being taken will enhance the competitive strength and resilience of the business in what remains an attractive market for Rolls-Royce," Chief Executive Warren East said.

Rolls-Royce shares at 1120 GMT traded flat at 6.77 pence, paring earlier gains and valuing the company at GBP12.44 billion.

Thursday's proposals follow a series of initiatives over the past three years to improve the competitiveness of the marine business, which Rolls-Royce has faced calls to divest.

Mr. East, who joined in 2015, has accelerated job cuts and hopes to generate up to GBP200 million ($250 million) in annual savings from late 2017.

He said in November that Rolls-Royce, which is no longer affiliated with the luxury car maker, would launch a review that could lead it to pare some businesses. He also said the company would invest in a new research and development center and service facility in Ulsteinvik, Norway.

The prolonged slump in oil and gas prices has weighed on demand for the Rolls-Royce-powered ships used in exploration and serving of rigs. The company, best known for the aircraft engines powering Airbus Group SE and Boeing Co. jetliners, has issued a series of profit warnings.

Write to Robert Wall at [e-mail] and Razak Musah Baba at [e-mail]

(END) Dow Jones Newswires

December 01, 2016 06:55 ET (11:55 GMT)

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