Rolls-Royce to cut 600 jobs in marine unit

MAY 18, 20158:58 PM

[LONDON] British engineering group Rolls-Royce said it would cut 600 jobs in its Norwegian-focused marine business in response to the lower oil price, a move it said would have a "broadly neutral" impact on 2015 profits.

Rolls-Royce is in the middle of a cost-saving plan in its aero-engines business and headquarters, axing 2,600 jobs, and the streamlining of its marine business comes after a year of profit downgrades and cancelled orders.

The company said that from 2016, the job cuts in marine would help generate £25 million (US$39 million) of benefits.

Employing 6,000 people, the unit builds propulsion systems, winches and anchors for ships, and depends on oil and gas-related customers for about 60 percent of its business. "The effect of low oil prices means we have to continue to look for further efficiencies," Rolls-Royce Marine president Mikael Makinen said in a statement on Monday.

The price of Brent oil collapsed from US$115 a barrel to US$45 a barrel between June 2014 and January this year as supply swamped the global market. It was trading at around US$67 a barrel on Monday, well below its 2011-14 average of around $108.

Half of the 600 jobs cuts would be in Norway, where the Marine unit's main manufacturing facilities are located, with the other half at the company's other global locations, Rolls-Royce said.

Following a troubled year, Rolls-Royce announced in April that Chief Executive John Rishton was stepping down, to be replaced from July by Warren East, the former chief executive of chip designer ARM.

Rolls-Royce, the world's second-largest maker of aero-engines, in November said it would cut 2,600 jobs over 18 months, mostly in its aerospace division, as part of a plan to boost profitability in that part of the business, where margins have lagged bigger rival General Electric.

REUTERS