Rolls-Royce To Cut 600 Jobs In Marine Unit As Low Oil Price Bites

reuters logo British engineering group Rolls-Royce said it would cut 600 jobs in its Norwegian-focused marine business in response to the lower oil price, a move it said would have a “broadly neutral” impact on 2015 profits.

Rolls-Royce is in the middle of a cost-saving plan in its aero-engines business and headquarters, axing 2,600 jobs, and the streamlining of its marine business comes after a year of profit downgrades and cancelled orders.

The company said that from 2016, the job cuts in marine would help generate 25 million pounds ($39 million) of benefits.

Shares in Rolls-Royce were down 1 percent at 1220 GMT, following the announcement about its marine unit, which accounted for about 12 percent of group revenues in 2014.

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Employing 6,000 people, the unit builds propulsion systems, winches and anchors for ships, and depends on oil and gas-related customers for about 60 percent of its business.

“The effect of low oil prices means we have to continue to look for further efficiencies,” Rolls-Royce Marine president Mikael Makinen said in a statement on Monday.

The price of Brent oil collapsed from $115 a barrel to $45 a barrel between June 2014 and January this year as supply swamped the global market. It was trading at around $67 a barrel on Monday, well below its 2011-14 average of around $108.

Half of the 600 jobs cuts would be in Norway, where the Marine unit’s main manufacturing facilities are located, with the other half at the company’s other global locations, Rolls-Royce said.

Following a troubled year, Rolls-Royce announced in April that Chief Executive John Rishton was stepping down, to be replaced from July by Warren East, the former chief executive of chip designer ARM.

Rolls-Royce, the world’s second-largest maker of aero-engines, in November said it would cut 2,600 jobs over 18 months, mostly in its aerospace division, as part of a plan to boost profitability in that part of the business, where margins have lagged bigger rival General Electric.

(Reporting by Sarah Young; Editing by Mark Potter)

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