Rolls-Royce’s Warren East admits investor confidence “not good” upon announcing major restructure to cut costs by £200m annually
Rolls-Royce’s chief executive Warren East admitted today that his company must become more transparent towards its shareholders, after several profit warnings have sent its stocks plummeting.
When announcing restructuring plans that will cut costs by up to £200m, East said investor confidence was “not in a good place”, and added that the company would begin putting more emphasis on delivering shareholder returns.
Rolls-Royce, which is under pressure after a series of profit warnings weighing heavily on its share price, has today put forward a “major restructuring process” to tackle costs and improve transparency.
Shares are down 33 per cent since the start of the year. In early November, Rolls-Royce stocks plunged by a fifth, after releasing a profit warning to investors suggesting profits could be £650m less than expected next year.
East said in a statement this morning:
As a group we are undergoing an unprecedented period of change. Change in our mix of business and how we account for it. Change in our industrial footprint as we invest in a wide-ranging transformation. And change in demand for our products as we double our large engine output and manage reductions in demand in other markets.
These changes, while more painful than we expected in the near-term, are vital to our long-term success.
East did not, however, comment on how many jobs might be cut as the company moves to slash costs.