Heads Are Roll(s-Royce)ing

Image source:

What's going on?

Rolls-Royce one of the UKs manufacturing darlings announced 4,600 job cuts and a plan targeting over $500 million in cost savings on Thursday, sending its shares cruising up by 6%.

What does this mean?

Rolls-Royce is a company thats bloated with costs. Despite being a manufacturer, it has over 30,000 non-manufacturing jobs which explains why its on a warpath to reduce its non-essential spending and create a leaner organisation.


Since his appointment in 2015, Rollss CEO has made almost 10,000 heads roll through job cuts. This latest round hits back and middle office roles (like admin, risk management and IT), that are just under 10% of all Rolls-Royce’s jobs globally.

Why should I care?

For markets: Rolls-Royces investors breathed a sigh of relief.


Rolls-Royce is one of the largest companies in the UK. Its also part of a group of the biggest companies on the UK stock market, whose stocks investors can buy and sell together (a.k.a. an index). Investors buying Rollss stock likely hope the cost-cutting plan clears a path for Rolls-Royce to become more profitable in the future. Its probably a welcome relief following a share price decline of 8% over the past year and news earlier this week that the company has had to delay faulty engine repairs (another reason to keep those factory workers in place).



The bigger picture: The UKs outlook is uncertain especially in manufacturing.


Data released on Monday showed the UKs manufacturing sector is at its weakest in five years as manufacturing output declined by 1.4% in April, compared to the previous month. Growth in the UK has been slowing and its unlikely to be helped by Brexit or 3,000 of Rollss jobs being cut in the UK.

Originally posted as part of the Finimize daily email.

The top 2 financial news stories in 3 minutes. Join over one million Finimizers

Read next

Chopsticks At Dawn

Sign up to Finimize

Get the two most important global financial news stories each day. Sent at midnight UK time.

Get started with one email a day

The top financial news stories in 3 minutes.