Shares in Rolls-Royce have jumped by almost 7% after an announcement that it is embarking on a further simplification of the business with the potential sale of its commercial marine operation.
There will be a reduction from five operating businesses to three core units based around Civil Aerospace, Defence and Power Systems.
As part of this exercise, it plans to consolidate the Naval Marine and Nuclear Submarines operations within the existing Defence business, and Civil Nuclear operations within its Power Systems business.
In a statement, the company said that these actions will allow it to better capitalise on its relationships with Defence customers and its market leading widebody position within Civil Aerospace, while strengthening its technology capabilities across a broad range of power generation applications.
It expects the subsequent restructuring to deliver an additional reduction in costs and assist it in improving performance from its core businesses.
Cost and complexity of support structures
Chief Executive Warren East said: “Building on our actions over the past two years, this further simplification of our business means Rolls-Royce will be tightly focused into three operating businesses, enabling us to act with much greater pace in meeting the vital power needs of our customers.
"It will create a Defence operation with greater scale in the market, enabling us to offer our customers a more integrated range of products and services. It will also strengthen our ability to innovate in core technologies and enable us to take advantage of future opportunities in areas such as electrification and digitalisation.
“Alongside the simplification into three operating businesses, we must continue to address the cost and complexity of the structures that support and serve these businesses, including our corporate head office, with greater decisiveness. Taking this action now will help secure the long-term benefit for our business and stakeholders of the growing cash flows that will be generated over the coming years.”