Rolls-Royce cuts divisions, reshuffles management in first step of restructure

Rolls-Royce is splitting out its divisions and reshuffling its senior management team, in what it said is the first step in a “wide-ranging” restructuring programme.

The FTSE 100 company said the current top-level Aerospace and Land & Sea divisional structure will end, leaving the company’s five key divisions - Civil Aerospace, Defence Aerospace, Marine, Nuclear and Power Systems - reporting directly to new chief executive Warren East.

As a result top executives Tony Wood, who is President of Aerospace, and Lawrie Haynes, who is President of Land & Sea, will leave the company in 2016 after assisting with the transition.

Rolls-Royce’s Civil Large Engines and Civil Small and Medium Engines businesses will merge to form the Civil Aerospace division, which will be headed up by current President of Civil Large Engines Eric Schulz.

Harry Holt, who is currently Group Operations Strategy Director, has been appointed President of Nuclear.

Colin Smith will also move from Group Director of Engineering & Technology to Group President, and a new Chief Operating Officer will also be appointed in the new year.

The company said the changes, which take effect on 1 January 2016, should “clarify executive accountabilities, intensify leadership focus on operational performance and allow Rolls-Royce to build on its world class engineering capabilities”.

It is the first step in a transformation programme to make the company more resilient and to generate incremental cost savings of £150m and £200m per year.

While the company didn’t give any figures on how much this reshuffle would save the company, it promised an update on the cost and range of the full restructuring programme in February 2016.

"The changes we are announcing today are the first important steps in driving operational excellence and returning Rolls-Royce to its long-term trend of profitable growth,” East said.