Rolls-Royce on target to meet cost reductions

Rolls-Royce has said it is on track to axe 5,500 jobs by the end of this year – 500 more than it expected – as part of a plan to save £1.3bn by the end of 2022.

The Derby manufacturing giant says it will have negative free cash flow of around £4.2bn for the year, in a trading update this morning (December 11), resulting in year-end net debt of up to £2bn, and that it is targeting a positive cash flow status by the second half of next year. By 2022, it says, it will look to take that figure to £2.75bn through disposals and organic growth.

Warren East, CEO, said: “We have taken decisive actions to protect and reposition our business in difficult and uncertain trading conditions, including the impact from a second wave of COVID-19. We have made rapid progress on our restructuring programme and the consolidation and reorganisation of our Civil Aerospace footprint is well underway.

“Our £5 billion recapitalisation package in November was well supported and has increased our resilience and strengthened our balance sheet. The outlook remains challenging and the pace and timing of the recovery is uncertain. However, our actions have given us a strong foundation to deliver better returns as our end markets improve and we continue to drive our ambition of delivering more sustainable power to support the creation of a net zero carbon economy.”

Last week, Rolls-Royce said it will transfer all staff at its Hucknall plant over to its ITP Aero business, which it will then look to sell, in a move which could “unlock new growth and investment opportunities” for the site.

The decision is part of the Derby manufacturer’s ongoing detailed review of its civil aerospace facility footprint, and will mean aero-engine structures will no longer be built at it Barnoldswick plant in the north-west.