Rolls-Royce announces further simplification of its business
Rolls-Royce has announced that it is embarking on a further simplification of its business, including the evaluation of strategic options for its Commercial Marine operation and a reduction from five operating businesses to three core units based around Civil Aerospace, Defence and Power Systems.
As part of this exercise, Rolls-Royce plan to consolidate their Naval Marine and Nuclear Submarines operations within their existing Defence business, and Civil Nuclear operations within the Power Systems business. This will facilitate a more fundamental restructuring of support and management functions in particular.
These actions are designed to align its business more closely with its strategic vision to pioneer cutting-edge technologies that deliver vital power. It aims to allow the company to better capitalise on its relationships with defence customers and its market leading widebody position within Civil Aerospace, while strengthening technology capabilities across a broad range of power generation applications.
Rolls-Royce expects the subsequent restructuring to deliver an additional reduction in costs and assist us it in improving performance from core businesses and the entiree Group. It is in the process of defining this restructuring and further details will be given at the time of its 2017 financial results on 7 March 2018 and a fuller discussion at a Capital Markets event later this year.
Chief Executive Warren East said: “Building on our actions over the past two years, this further simplification of our business means Rolls-Royce will be tightly focused into three operating businesses, enabling us to act with much greater pace in meeting the vital power needs of our customers. It will create a Defence operation with greater scale in the market, enabling us to offer our customers a more integrated range of products and services. It will also strengthen our ability to innovate in core technologies and enable us to take advantage of future opportunities in areas such as electrification and digitalisation.”
“Alongside the simplification into three operating businesses, we must continue to address the cost and complexity of the structures that support and serve these businesses, including our corporate head office, with greater decisiveness. Taking this action now will help secure the long-term benefit for our business and stakeholders of the growing cash flows that will be generated over the coming years. At the same time, our operational teams must continue to focus on managing in-service issues within Civil Aerospace and delivering the current increase in engine production.”