Rolls-Royce to sell commercial marine division in shake up

18 January 2018

Rolls-Royce chief executive Warren East has initiated a rejig of the engineering group and is taking it out of the commercial marine sector.

News of the sale, which, according to some analysts could bring in 800 million, pushed shares in Rolls-Royce up 5.4 per cent, or 46p, to 900p.

This works out to around 80 per cent up on the 513p low that Rolls hit in late 2015 after East was forced to make two profit warnings in four months. It however, remains much short of 13 which it almost touched four years ago before a string of crises hit the company under his predecessor, John Rishton.

Rolls-Royce, which counted revenues of around 13.8 billion last year, employs 50,000 people around the world, nearly half of them in the UK and is best known for its aircraft engines, which it makes for the likes of the Boeing 787 Dreamliner and the Airbus A350 Extra Wide Body.

Rolls Royce also makes engines for the Eurofighter Typhoon and the F-35 fighter jets that will be stationed on the UK's two new aircraft carriers, whose giant turbines are also made by Rolls-Royce. The UK's nuclear-powered submarines are also powered by Rolls' technology.

Chief executive Warren East said the latest overhaul would allow the company to respond quicker to meet the needs of its customers, both in the wide body civil aviation market and in defense, and also cut costs.

"It will create a Defence operation with greater scale in the market, enabling us to offer our customers a more integrated range of products and services," he said, CNBCreported.

"It will also strengthen our ability to innovate in core technologies and enable us to take advantage of future opportunities in areas such as electrification and digitalization."

The downturn in oil and gas markets since 2015 saw Rolls-Royce reduce the number of sites in its marine business from 27 to 15. It also cut the unit's workforce by 30 per cent to 4,200, with the majority now based in the Nordic region.

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