Rolls-Royce restructuring, will review commercial marine business

The following is text from a news release from Rolls-Royce:

(LONDON) — Rolls-Royce announces that it is embarking on a further simplification of the business, including the evaluation of strategic options for its commercial marine operation and a reduction from five operating businesses to three core units based around Civil Aerospace, Defense and Power Systems. As part of this exercise, it plans to consolidate its naval marine and nuclear submarines operations within its existing defense business, and civil nuclear operations within its power systems business. This will facilitate a more fundamental restructuring of support and management functions in particular.

These actions are designed to align its business more closely with its strategic vision to pioneer cutting-edge technologies that deliver vital power. It will allow Rolls-Royce to better capitalize on its relationships with defense customers and our market leading widebody position within civil aerospace, while strengthening its technology capabilities across a broad range of power generation applications. Rolls-Royce expects the subsequent restructuring to deliver an additional reduction in costs and assist it in improving performance from its core businesses and the whole group. The company is in the process of defining this restructuring and further details will be given at the time of its 2017 financial results on March 7, 2018 and a fuller discussion at a capital markets event later this year.
Strategic review of commercial marine

Since 2015 the company's marine business has responded to weak demand for products and services for the offshore oil and gas market, which significantly impacted its profitability. It has divested non-core businesses and reduced the number of sites from 27 to 15 – an overall reduction in footprint of 40 percent. It has managed a reduction in its workforce by 30 percent to 4,200, with the majority now based in the Nordic region. At the same time, the business has been investing in new facilities and new technologies and become an industry leader in the fields of ship intelligence and autonomous vessels, culminating in June 2017 with the successful demonstration, in Copenhagen harbor, of the world’s first remotely operated commercial vessel. Given the progress the business has already made, it is now an appropriate time to conduct a strategic review of commercial marine. This review will be undertaken during 2018 and the company will update the market of the outcome at the appropriate time.

Regardless of the outcome of this strategic review, Rolls-Royce will retain the marine operations which supply complex power and propulsion systems to naval customers, including the Royal Navy and U.S. Navy. During the first quarter of 2018, these naval operations will become part of an enlarged defense business named Rolls-Royce Defense, comprising the current defense aerospace business and its nuclear submarines operation.

Rolls-Royce Power Systems will continue to supply and service complex power and propulsion systems from MTU and Bergen Engines for customers in marine and infrastructure markets, with applications ranging from power generation, rail and mining, to construction, agriculture, yachts and defense.

By Professional Mariner Staff