Rolls-Royce’s plan to fire up profits

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British engineering company Rolls-Royce is launching a major restructuring programme, under its new chief executive Warren East. As Hayley Platt reports it follows four profit warnings in a year.

Rolls-Royce’s plan to fire up profits

Its engines are used to fly planes around the globe.

But shares in Rolls-Royce have dived 15 percent over the past two weeks.

That’s when the British engineer announced its last profit warning – its fourth in a year.

No surprise then that the firm’s new Chief Executive is restructuring.

Warren East wants to simplify the organisation, streamline top management and reduce costs by between 150 and 200 million pounds a year.

Bill Blain is from Mint Partners.

SOUNDBITE: Mint Partners Markets Strategist, Bill Blain, saying (English):

“If we look at the global aviation business, we are expecting somewhere in the region of 40,000 new aircraft over the next 20 years. That should be an enormous opportunity for Rolls-Royce, but of course they’ve diversified into marine as well, and where you see success in aviation, other areas of Rolls-Royce business are still in the doldrums.”

East made a presentation to shareholders to try and restore confidence.

One of them — ValueAct — raised its stake to 10 percent just last week.

The U.S. activist hedge fund has been pressing for a seat on the board.

It also reportedly wants the company to focus on its main aerospace business — which accounts for half its profits — and get rid of the marine engines unit.

Tags : Profits, fire, plan, Rollsroyces

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