Rolls-Royce CEO Warns of ‘Higher Risk’ in Letter to Employees

  • East says workers must boost efforts to meet delivery targets
  • Restructuring, job cuts are ‘simply unpleasant,’ chief says

Rolls-Royce Holdings Plc Chief Executive Officer Warren East warned employees that the engine maker needs to step up efforts to recover a waning delivery schedule.

“Delivery issues mean there is a lot to do in the second half,” posing “a higher risk” to full-year profit targets, East said in a letter posted to the company’s internal blog in late May. The current restructuring, which will see additional cuts of between 20 and 25 percent of the company’s 2,000 managers, has been “simply unpleasant,” he said.

East, who took over the top job 11 months ago, has been working to slim Rolls’s bloated managerial team and streamline overly complex processes as he tries to recover the British manufacturer from a string of company’s profit warnings under his predecessor. The CEO in May said the company’s profits would come “close to break even” in the first half and retained its full-year guidance.

“I appreciate that this is a difficult environment, difficult enough just to do the job, without people like me preaching about ‘pace,’” he said in the letter. “If we really want to be the Rolls-Royce of our industry we must push through overdue changes we all know we have to make.”

The Financial Times earlier reported news of East’s note to employees. A Rolls-Royce spokesperson declined to comment on the report.

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