Rolls-Royce Announce Plans to Restructure Marine Business

Monday / December 5, 2016


Rolls-Royce has announced plans to accelerate the transformation of its Marine business as a result of continuing weakness in the maritime market. Rolls-Royce’s Marine business supplies a range of technology and services to customers operating merchant, offshore and naval vessels.

Planned measures include a further simplification of the structure of the business, with a streamlining of the senior management team, and a series of cost reduction initiatives which will result in the loss of around 800 roles worldwide and an estimated £45-50 million of annualised savings from mid-2017. Costs of this restructuring are expected to be around £20 million, split between 2016 and 2017.

As part of the programme, investments are also being proposed to establish an R&D centre for the development of new propulsion products, and an expanded Services hub for Northern Europe, both in Ulsteinvik, Norway. The organisational changes will also increase the strategic focus on developing further electrical and digital technologies as the maritime industry shifts towards a more digital future where Ship Intelligence plays a greater role.

Today’s proposals follow a series of cost reduction initiatives carried out over the past three years to improve the affordability and competitiveness of the Marine business. The proposed job reductions are in addition to the reduction of 1,000 employees announced in May and October last year. The Marine business currently employs around 4,800 people in 34 countries.

In the trading update on 16 November, we highlighted that there were no signs of a recovery in offshore oil & gas markets and orders for new equipment remain very weak, resulting in expectations of further revenue weakness for the business in 2017. Service revenues have also been impacted by lower utilisation of vessels.

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