British aircraft engine manufacturer Rolls-Royce (OTC:RYCEY) announced on Tuesday that it plans to cut 2,500 jobs globally, a move that represents approximately six percent of its total workforce. CEO Tufan Erginbilgic, a dual UK-Turkish national with extensive BP (NYSE:BP) experience, is leading the initiative as part of a broader strategy to streamline the organization and strengthen areas such as procurement and supply chain management.
This decision comes after a period of considerable resilience for the company. According to InvestingPro data, Rolls-Royce has a market capitalization of $22.246 billion and a P/E ratio of 12.05. The company reported a first-half net profit of £1.2 billion ($1.5 billion) in August, marking a significant turnaround from a £1.6 billion loss the previous year. This aligns with the InvestingPro Tip that the company is expected to be profitable this year.
The job cuts also follow a precedent set by former CEO Warren East in 2020. In response to the severe impact of the pandemic on the aviation industry, East implemented a significant divestment program and axed over 9,000 jobs. The latest round of job cuts under Erginbilgic's leadership indicates a continued focus on efficiency and cost-effectiveness within the company.
InvestingPro data also shows that the company has seen a strong return over the last three months, with a 46.08% increase. This information is supported by an InvestingPro Tip that highlights the company's high return over the last year. Additionally, the company's revenue growth has been accelerating, with a 32.46% increase in revenue in the last 12 months, according to InvestingPro data.
Rolls-Royce is a prominent player in the Aerospace & Defense industry, as indicated by one of the InvestingPro Tips. For more insights like these, consider checking out InvestingPro, which offers a total of 11 additional tips for this company.
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