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Rolls-Royce on track to axe 8,500 jobs by end of 2021

Rolls-Royce on track to axe 8,500 jobs globally by the end of this year as engineering giant tries to claw its way back from pandemic hit

  • Rolls-Royce is on a major cost-saving plan and is cutting 8,500 jobs
  • Shares in the FTSE 100-listed engine maker group have fallen today 


Rolls-Royce has confirmed that the pace of its transformation plan is running ahead of schedule, stating that it expects to have axed 8,500 jobs worldwide by the end of this year.

The company said the restructuring programme, launched in May 2020, was delivering sustainable cost savings more quickly than initially anticipated, adding that is was on track to make £1.3billion worth of savings by the end of next year. 

The engineering giant said its improved trading performance drove a return to positive free cash flow in the third quarter and reduced the outflow expected in the second half.

Job losses: Rolls-Royce will have cut around 8,500 jobs globally by the end of the year

Rolls now expects its free cash outflow for the fiscal year to be better than the previous guidance of £2billion.

Boss Warren East, said: ‘We are delivering on the elements within our control and are focused on our commitments.

‘We have achieved good results with our fundamental restructuring programme, as we sustainably reduce costs and deliver a leaner and more efficient company and are firmly on course to complete our disposals programme.

‘While external uncertainties clearly remain, we have seen continued gradual recovery in our Civil Aerospace business, a growing order book in Power Systems and have secured a significant contract win in Defence.’ 

He added: ‘This all underpins our strategy of creating a better quality and more balanced business which can deliver significantly improved returns and cash flow into the future.’

A $2billion sale of its Spanish unit, ITP Aero, saw Rolls-Royce meet its £2billion pound target in September. 

The group, which has over 400 airlines and leasing customers around the world, was hit hard by the pandemic due to its exposure to the airline industry, forcing it to raise money and take out hefty loans.

Shares in the FTSE 100-listed group fell this morning, and are currently down 2.18 per cent or 2.80p to 125.84p. A year ago the firm’s share price was 129.65p. Investors are not set to receive a dividend from the group until 2023.

Richard Hunter, head of markets at Interactive Investor, said: ‘The group’s share price has been subject to some extreme volatility as the pandemic has moved through its various phases. 

‘A more recent recovery in the price over the last three months of 16 per cent on improving prospects has led to a gain of 2 per cent over the last year, as compared to a hike of 12 per cent for the wider FTSE 100. 

‘Over the last two years, however, the shares remain down by 48 per cent and the fact that a dividend cannot be paid until at least 2023 removes another element of investment attraction.

‘There are signs of progress within its restructuring programme and the company should emerge as a leaner entity as and when some of the dust eventually settles. 

‘At the same time, the strength of the Defence unit in particular is of solace, and a gradual recovery in flying hours would improve the cause over the medium term. 

‘In the meantime, however, the stock remains one only for the most steely and patient of investors, with the market consensus of the shares as a hold also implying that the company still has some way to go before a recovery can be called.’

Michael Hewson, chief market analyst at CMC Markets UK, said: ‘All in all, today’s update is broadly positive in that other areas of the business away from civil aviation are moving in the right direction, however investors seem unable to move past concerns about the return of international travel, with the shares drifting lower in early trade.’ 

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