Rolls-Royce’s (RR) Shares Edged Up 2.53% on Restructuring Plans

The Rolls-Royce Holdings PLC (LON: RR) share price edged 2.53% higher after announcing plans to create a simpler, more streamlined organisation as the next phase of its transformation plan, which spans multiple years.

The plane engine manufacturer revealed plans to consolidate many of the separate business divisions currently operating in the company into a few divisions that will create a more agile business that can serve its customers better and continue creating and maintaining world-class products.

The restructuring will help Rolls-Royce enhance its capabilities in critical functions such as supply chain management and procurement, ensuring they are as robust as the company's engineering and technical excellence.

The proposed changes are designed to eliminate duplication and enhance organisational cost-efficiency. Rolls Royce’s vigilant cost management and staff management strategies throughout 2023 have allowed us to minimise the overall reduction in our workforce.

The company expects to eliminate about 2,000 to 2,500 positions across its global workforce, given that it employs about 42,000 people globally. With a focus on core business capabilities, Rolls Royce will amalgamate Engineering Technology and Safety into a unified team across the entire organisation.

The above team will assume responsibility for product safety, engineering standards, processes, methods, and tools. This consolidation will allow the firm to harness engineering talent and technology more effectively throughout our operations.

Simon Burr, presently the Director of Product Development and Technology in the Civil Aerospace division, will lead the above team as an immediate addition to the Executive Team. 

The proposed initiatives also encompass establishing a comprehensive, enterprise-wide procurement and supplier management organisation. This entity will support consolidating group expenditures, capitalise on economies of scale, and develop consistent best-in-class standards.

Tufan Erginbilgic, the Rolls Royce CEO, said: “We are building a Rolls-Royce that is fit for the future. That means a more streamlined and efficient organisation that will deliver for our customers, partners and shareholders. Our business is full of committed, talented people, and I believe these changes will enable them to build greater capability in areas that are key to our long-term success. This is another step on our multi-year transformation journey to build a high-performing, competitive, resilient and growing Rolls-Royce.”

Rolls-Royce's (RR) share price. 

The Rolls Royce share price rose 2.53% to trade at 218.60p, from Monday’s closing price of 213.20p.