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Rolls-Royce to unveil major restructuring Rolls-Royce to unveil major restructuring
(35 minutes later)
Embattled engine-maker Rolls-Royce is planning to slash costs by up to £200m a year in a bid to revive its fortunes.Embattled engine-maker Rolls-Royce is planning to slash costs by up to £200m a year in a bid to revive its fortunes.
The firm issued its fifth profit warning in less than two years earlier this month as a result of weak demand, and the new boss is set to outline plans for a “major restructure” on Tuesday afternoon. The firm issued its fifth profit warning in less than two years earlier this month as a result of weak demand, and its new boss is to outline plans for a “major restructure” on Tuesday afternoon.
Related: Rolls-Royce chief ready to begin fightback with a pitch to the CityRelated: Rolls-Royce chief ready to begin fightback with a pitch to the City
Warren East, who only joined the firm in the summer, said the changes will include job cuts to senior management, a reduction in fixed costs and greater accountability on decision-making. Warren East, who joined the firm in the summer, said the changes will include job cuts to senior management, a reduction in fixed costs and greater accountability on decision-making.
East said he is hoping the changes will achieve gross cost savings of between £150m and £200m a year, with benefits accruing from 2017. East said he was hoping the changes would achieve gross cost savings of £150m-£200m a year, with benefits accruing from 2017.
“As a group we are undergoing an unprecedented period of change,” he said. “My review has underpinned my confidence about the opportunities before us and I am convinced that our long-term outlook is positive.“As a group we are undergoing an unprecedented period of change,” he said. “My review has underpinned my confidence about the opportunities before us and I am convinced that our long-term outlook is positive.
“It has also highlighted a number of areas where we can simplify the way we work, inject pace into our decision-making and responsiveness, and improve our operational gearing and operational effectiveness.“It has also highlighted a number of areas where we can simplify the way we work, inject pace into our decision-making and responsiveness, and improve our operational gearing and operational effectiveness.
“This is fundamental to ensuring Rolls-Royce best positions itself to compete for the long-term opportunities before us.”“This is fundamental to ensuring Rolls-Royce best positions itself to compete for the long-term opportunities before us.”
ValueAct, a US activist hedge fund, recently doubled its stake in Rolls-Royce to 10% amid speculation that it will seek a break-up of the business. ValueAct, a US activist hedge fund, recently doubled its stake in Rolls-Royce to 10% amid speculation it will seek a break-up of the business.