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Rolls-Royce to cut 300 more management posts as profit stutters
[LONDON] Rolls-Royce Holdings Plc said it's working on plans to eliminate as many as 300 more management posts as the maker of engines for Airbus Group SE and Boeing Co's biggest jets steps up a cost-cutting drive amid stuttering first-half earnings.
The UK company, which has already announced the elimination of 200 senior positions in two tranches, is in the process of informing employees of the next steps in its savings program, and will reach a decision on the number of jobs to go by the end of the first half.
The London-based Rolls-Royce plans to cut between 20 and 25 per cent of its 2,000 management positions, Chief Executive Officer Warren East said in a briefing following the company's annual shareholder meeting on Thursday.
The CEO said 2016 earnings will be "a little more skewed" toward the second half than the company had anticipated, after Rolls said in a statement that the first-half figure will be "close to break even." Any profit the company does report for the current six months will be "very, very small," he said.
While Rolls-Royce shares fell as much as 6.7 percent on the earnings update, East said he's "totally confident" that an end- of-year surge in aero-engine deliveries will enable the company to "significantly" lift profit before interest and tax in order to meet its full-year earnings guidance.
Airbus's handover rate for the A350 wide-body jet - which accounts for 50 per cent of Rolls-Royce's engine backlog - has been lower than planned this year as the European planemaker grapples with issues affecting the supply of cabins. Rolls said transitioning between the Trent 700 and 7000 engines for the current and future A330 models has also taken a toll.