LONDON, Dec 1 (Reuters) – British engineering company Rolls-Royce said it would cut a further 800 jobs in its marine business to save an extra 50 million pounds ($63 million) a year, responding to weak demand from shipping and energy customers.
The marine business, which depends on oil and gas-related customers for about 60 percent of its business and currently employs about 4,800 people with its main operations in Norway, has seen weak demand for new equipment and lower maintenance revenues as customers use their vessels less.
Rolls, which has been cutting costs for three years to make the marine unit more competitive, said the cuts were part of a plan to save between 45 million pounds and 50 million pounds on an annualised basis from the middle of next year.
The job cuts, whose location the company did not immediately specify, are in addition to the 1,000 posts it said would go last year.
The maker of engines for military jets, ships and nuclear-powered submarines, is a year into a wider turnaround programme for the whole business.
Rolls-Royce Chief Executive Warren East said in the long-term the company remained keen on the marine sector.
“The actions being taken will enhance the competitive strength and resilience of the (marine) business in what remains an attractive market for Rolls-Royce,” he said in a statement.
The new marine restructuring plan would cost it about 20 million pounds, split between this year and next, Rolls added.
As well as plunging demand for marine engines and repairs, Rolls has been hit by a slowdown in demand for high-margin aircraft engine servicing, which has dragged on its performance with profit due to halve this year.
Shares in the company, which have fallen from last month’s high of 794 pence since a capital markets day on Nov. 16 when East said he needed to speed up change at the engineer, were little changed at 676.5p at 1120 GMT. ($1 = 0.7957 pounds) (Reporting by Sarah Young; Editing by Keith Weir)
(c) Copyright Thomson Reuters 2016.