Rolls-Royce to cut 4,600 jobs over next two years in 'fundamental' restructuring
Rolls-Royce said in a statement: "Rolls-Royce announces the next stage in our drive for pace and simplicity with a proposed restructuring that will deliver improved returns, higher margins and increased cash flow. This will support our long-term ambition to be the world's leading industrial technology company. Following the announcement in January that we will simplify the Group into three customer-focused business units, this proposed restructuring will create smaller and more cost effective corporate and support functions and reduce management layers and complexity, including within engineering. It follows a comprehensive review of our structure, culture, processes and people with a view to creating a much simpler, healthier and dynamic organization with clearer accountabilities, greater productivity and quicker decision-making. Over the next 24 months, we expect the proposed restructuring will lead to the reduction of around 4,600 roles, predominantly in the UK where the majority of our corporate and support functions are based. Around a third of these roles are expected to leave by the end of 2018. The program is expected to gain further momentum through 2019, with full implementation of headcount reductions and structural changes by mid-2020." The total cash cost of the restructuring is expected to be GBP 500m which includes the cost of redundancies and required systems investments to facilitate the program. These cash costs will be incurred across 2018, 2019 and 2020 and, given the one-off nature of the restructuring program, these will be reported below group underlying free cash flow. Full year net cost savings from this restructuring are expected to reach a run rate of GBP 400m per annum by the end of 2020.