5 October 2015
Rolls-Royce CONTINUES TRANSFORMATION OF MARINE BUSINESS THROUGH INVESTMENT IN R&D AND FURTHER EFFICIENCIES
Rolls-Royce has today announced plans to continue the transformation of its Marine business through a programme of increased investment in research and development and further efficiencies, as it positions the business for the future, following the continuing impact of the sharp fall in oil prices.
Today's proposals will build on a series of cost reduction initiatives carried out over the past two years, and focus on improving competitiveness by reducing corporate and administrative costs with most of the early savings being reinvested in increased R&D activity. Profit and revenue guidance for our Marine business, as set out in July, remains unchanged.
The number of employees will be reduced by up to 400 worldwide by the end of next year, in addition to the reduction of 600 employees previously announced in May, which was also driven by the impact of the low price of oil and subsequent fall in orders.
Mikael Makinen, Rolls-Royce, President - Marine, said: "After many years of strong performance through to 2013, led by good growth in the oil and gas sector, our order book and profitability have been adversely impacted by the sharp and subsequently prolonged drop in the price of oil.
"This is a fundamentally strong business, but we have to take decisive action to position it for future growth, with a structure that is simple, efficient and effective. At the same time we will sharpen our focus on the marine technologies of tomorrow by significantly increasing our current rate of investment in research and development.
"Reducing our workforce is never an easy decision, but the continued weak oil price, and the need to become more competitive, means it is necessary, if we are to build a strong base from which we can successfully grow this business in the future."
Rolls-Royce's Marine business employs around 5,800 people in 34 countries, and supplies a range of technology and services to customers operating naval, merchant and offshore vessels.
We expect the proposals will generate full year savings of £40m, with incremental benefits from 2016 onwards; most of the early savings will be invested in increased R&D activity. The cost of the programme was anticipated in the guidance provided in July, in which we set out that a further restructuring charge of up to £30m would be taken in the second half of the year. Due to the timing of actions being taken, this will now see £20m charged in 2015 and £10m taken in 2016.
About Rolls-Royce Holdings plc
1. Rolls-Royce's vision is to create better power for a changing world via two main business divisions, Aerospace and Land & Sea. These business divisions address markets with two strong technology platforms, gas turbines and reciprocating engines. Aerospace comprises Civil Aerospace and Defence Aerospace. Land & Sea comprises Marine, Nuclear and Power Systems.
2. Rolls-Royce has customers in more than 120 countries, comprising more than 380 airlines and leasing customers, 160 armed forces, 4,000 marine customers including 70 navies, and more than 5,000 power and nuclear customers.
3. Our business is focused on the 4Cs:
· Customer - placing the customer at the heart of our business
· Concentration - deciding where to grow and where not to
· Cost - continually looking to increase efficiency
· Cash - improving financial performance.
4. Annual underlying revenue was £14.6 billion in 2014, around half of which came from the provision of aftermarket services. The firm and announced order book stood at £76.5 billion at 30 June 2015.
5. In 2014, Rolls-Royce invested £1.2 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 54,000 people in more than 50 countries. Over 15,500 of these are engineers.
7. The Group has a strong commitment to apprentice and graduate recruitment and to further developing employee skills. In 2014 we employed 354 graduates and 357 apprentices through our worldwide training programmes. Globally we have over 1,000 Rolls-Royce STEM ambassadors who are actively involved in education programmes and activities; we have set ourselves a target to reach 6 million people through our STEM outreach activities by 2020.
For further information, please contact:
Investors: Media:
John Dawson Richard Wray
Director - Investor Relations Director of External Communications
Rolls-Royce plc Rolls-Royce plc
T: +44 20 7227 9087 T: +44 20 7227 9163
M: +44 7557 287101 M: +44 7974 918416
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Craig Taylor
Head of Communications - Marine
Rolls-Royce plc
T: +44 (0)1332 632 612
M: +44 (0)7807 969426
[email protected]
www.Rolls-Royce.com
