LONDON (Reuters) - British engineer Rolls-Royce (RR.L) said it would cut 2,600 jobs over the next 18 months, in a battle to reduce costs almost three weeks after a major profit warning.
The world’s second-largest maker of aircraft engines also promoted David Smith from finance director of the Aerospace division to become the new group chief financial officer, replacing Mark Morris who leaves after 27 years.
Shares in the group spiked on the news and were up 2 percent at 1426 GMT.
The job cuts, which will mostly come in the Aerospace division, will cost an extra 120 million pounds ($192 million) over the next two years, before reducing spend by around 80 million pounds once the changes have been fully implemented.
“We are taking determined management action and accelerating our progress on cost,” said Chief Executive John Rishton. “The measures announced today will not be the last, however theywill contribute towards Rolls-Royce becoming a stronger and more profitable company.”
Rolls, which dates back to 1884, warned on Oct. 17 that deteriorating economic conditions meant its profit would not rise next year as previously forecast, sending its shares plunging by 16 percent at the time.
The CFO change follows last month’s profit warning, its second in eight months, raising questions about the company’s visibility over its future earnings.
Rolls-Royce declined to comment on Morris’s exit.
“Mark has decided to leave the company after 27 years and we are not going to comment further,” a spokesman for Rolls-Royce said.
Rolls said in October that the market for its main aircraft engine business would strengthen but customers in the oil and gas, mining, construction, industrial and agricultural sectors were cancelling or delaying orders.
Reporting by Kate Holton, Additional reporting by Sarah Young; editing by Paul Sandle