22 February 2024 , 12:49
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Renowned engine-maker, Rolls-Royce, is in the process of a money-saving overhaul which they've confirmed is "well under way".
The company plans cuts 2,500 jobs by the end of next year. The firm reported a substantial annual profit of £2.4 billion for 2023, showing an improvement from the losses of £1.5 billion experienced in 2022.
The company's improvement was helped by their cost-cutting measures and greater than predicted earnings. The company declared that underlying operating profits more than doubled to £1.6 billion in 2023, shooting up £652 million in the prior year.
This happened while revenues managed to leap a full 22% to £16.5 billion. Rolls said it had already achieved roughly £150 million of its planned savings of between £400 million to £500 million. These savings were announced back in October when the company made the difficult decision to let go between 2,000 to 2,500 members of staff as part of their financial plan.
"Our actions to deliver sustainable cost efficiencies and improve competitiveness are well under way, " the company said. The company forecaste that the following year's underlying earnings would rise yet again, hitting anywhere between £1.7 billion and £2 billion.
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The company said it was also facing various challenges including difficulties with its supply chain would continue to be an issue for another two years. Furthermore, uncertainty regarding geopolitics and inflation adds to the struggles the company might have to face.
The company said that engine flying hours (a crucial performance gauge for the group) had rebounded to 88% of their previous levels seen in 2019 (pre-Covid periods), demonstrating a year on year increase of 36%. The company has said that orders for large engines are the highest they've been since 2007.
They predict that by 2024, flying hours for these large engines will return to and may even exceed the levels seen before the pandemic. Rolls, which had a staff of 42,000 people before the most recent job cuts, announced last October that the next stage of their revamp plan would focus on removing "duplication" to save costs.
The firm also plans to establish a new procurement team to cut costs further, with a goal of reducing procurement costs by £1 billion. They're planning to move some back-office functions, like human resources and finance, closer together too.
Tufan Erginbilgic, chief executive of Rolls, said: "Our transformation has delivered a record performance in 2023, driven by commercial optimisation, cost efficiencies and progress on our strategic initiatives. This step-change has been achieved across all our divisions despite a volatile environment with geopolitical uncertainty, supply chain challenges and inflationary pressures."