Rolls-Royce Holdings (LON:RR) is set to axe more than 4,000 jobs this week, The Sunday Times has revealed. In a separate development, the company signalled that it had discovered more issues with its problematic Trent 1000 engines.
Rolls-Royce’s share price has slipped into the red in today’s session, having given up 0.69 percent to 829.60p as of 08:44 BST. The stock is underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.50 percent higher at 7,719.74 points. The group’s shares have lost about 7.5 percent of their value over the past year, as compared with about a 2.6-percent rise in the Footsie.
Rolls-Royce to axe jobs
The Sunday Times reported yesterday that Rolls-Royce’s chief executive Warren East was expected to announce a cull of middle managers and back-office staff at an analyst briefing on Friday. The newspaper notes that City analysts think that the British engine maker could axe up to 10 percent of its 50,000-strong workforce, although the total is expected to be lower.
The cull will come with East continuing with his restructuring of the FTSE 100 company following several profit warnings.
Trent 1000 update
Rolls-Royce further updated investors on its Trent 1000 engines, having recently cautioned that it needs to increase the number of inspections of the problematic engines, with the move resulting in higher costs. The company said today that it had discovered a pressure compressor durability issue on a small number of high life Package B Trent 1000 engines. The group had previously disclosed that the issue had affected its Package C engines.
Rolls-Royce, however, reassured investors that while the consequences of the additional inspection requirements “would incur some additional cost”, it was nevertheless confident that its FY18 guidance for free cash flow of around £450 million +/- £100 million remained unchanged.