Rolls-Royce eyes simplification, starts marine operation review

Rolls-Royce said it has embarked on a simplification of its business that will see the evaluation of strategic options for commercial marine operation. 

It will also include a reduction from five operating businesses to three core units based on civil aerospace, defence and power systems, the company said in a statement.

Rolls-Royce plans to consolidate it naval marine and nuclear submarines operations within its existing defence business which will facilitate a more fundamental restructuring of support and management functions in particular.

These actions are designed to align Rolls-Royce business more closely with its strategic vision to pioneer cutting-edge technologies that deliver vital power.

The company said it will allow it to better capitalize on its relationships with defence customers and the market leading widebody position within civil aerospace, while strengthening the technology capabilities across a broad range of power generation applications.

“We would expect the subsequent restructuring to deliver an additional reduction in costs and assist us in improving performance from our core businesses and the whole Group,” the statement reads.

Further details of the restructuring will be given at the time of the company’s 2017 financial results on March 7, 2018.

The company has also reviewed its commercial marine segment which, since 2015 it responded to weak demand for products and services for the offshore oil and gas market, which significantly impacted its profitability.

It has divested non-core businesses and reduced the number of sites from 27 to 15 – an overall reduction in footprint of 40 percent.

With footprint reduction, as well as workforce reduction, the company has focused on investing in new facilities and technologies and has made progress that prompted a strategic review to be undertaken during 2018.

Regardless of the outcome of this strategic review, Rolls-Royce will retain the marine operations which supply complex power and propulsion systems to naval customers, including the Royal Navy and US Navy.

During the first quarter of 2018, these naval operations will become part of an enlarged defence business named Rolls-Royce Defence, comprising the current defence aerospace business and the nuclear submarines operation.

Rolls-Royce will also continue to have run the engine business serving marine customers within power systems.