Analysts have raised concerns that Rolls Royce stakeholders may force it to sell off its struggling marine business. Investor Value Act has increased its stake to 10% – the largest for a single body – and is rumoured to be pressing for a seat on the OEM’s board, sparking debate about whether it will use its influence to make the British company divest its marine unit.
However, speaking during an investor update this week, Rolls-Royce’s chief Warren East seemed to dismiss the rumours when he said: “just because something is in the bottom left corner concerning the sales, that doesn’t mean that we will sell this business”.
The group, which has laid off over 1,000 employees from its marine business since May has been particularly hard hit by the slump in oil prices. “The outlook for 2016 is very challenging. In addition, offshore marine markets have continued to deteriorate throughout the year and, as a result, 2016 forecasts have weakened further,” East said. “We are setting expectations to reflect a further 15-20% decline in offshore marine market demand, weakening marine profit by a further £75-100.”
The company’s board of directors has committed to a major restructuring to streamline the organisation - which will include redundancies to senior management positions – and also to cutting costs by £200m per year. They expect to see payback on the actions within the next two years.
Despite the downturn, East remained optimistic: “I remain very confident about the opportunities before us and convinced that our long-term outlook is positive. Our industrial transformation is proceeding well and our core large engine business remains on track to gain significant market share and build a strong, cash generative platform for the future.”