The FTSE 100-listed Rolls-Royce Holdings PLC (GB:RR) plans to cut 2,500 jobs globally as part of its restructuring plan. With this plan, the company’s CEO, Tufan Erginbilgic, aims to control costs and drive operational efficiency. These cuts will primarily affect white-collar and other management employees.
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As first reported by Sky News, the job cuts will affect the company’s global workforce, with thousands to be impacted in the UK market. These job cuts will mainly impact non-engineering employees to tighten costs by removing duplicate positions in the company. The company hired consulting firm McKinsey in 2023 for its advisory on the transformation. Recently, Erginbilgic made significant changes in senior management, affecting key positions in the civil aerospace and defence segments.
Rolls-Royce is a leading manufacturing company that specializes in designing engines and power systems for the aerospace and defense industries. Based in the UK, the company has established a global presence, operating in the U.S., Asia, Europe, the Middle East, and Africa.
The Restructuring Paid-Off Well
Erginbilgic, who joined the company in January, was not happy with the management and referred to the company as a “burning platform.” Since then, Rolls-Royce has undergone a remarkable rebound, driven by a resurgence in aviation demand and the early successes of its transformation plan. The turnaround plan paid off well, and the profits recovered around five times.
In the first half results of 2023, the company posted solid numbers in sales and profits, raising the full-year outlook. It has adjusted its annual earnings forecast to be in the range of £1.2 billion to £1.4 billion, surpassing the previous guidance of £800 million to £1 billion.
The restructuring efforts also gained a lot of praise from investors, as the stock value has tripled in the last 12 months, gaining almost 200%.
Is RR a Good Investment?
According to TipRanks, RR stock has received a Moderate Buy rating based on six Buy and four Hold recommendations. The Rolls-Royce share price forecast is 256.73p, which implies an upside of 20% on the current level.
