Manufacturing giant Rolls-Royce has today reported a record half-year loss of £5.4bn. The firm has already made thousands of job cuts due to the impact of COVID-19 – and this morning’s announcement could spell further cuts in the weeks ahead.
The group’s half-year loss of £5.4bn for the first six months of 2020 follows losses of £791m a year earlier.
Rolls-Royce’s finances have been decimated due to the collapse in air travel and international trade – and with seemingly no upturn in either industry on the horizon, the future looks bleak for the company.
The firm revealed that large engine deliveries were down by 50% in the first six months of the year when compared to the same time period in 2019. Due to the grounding of flights across the world, Rolls’ revenues were hit even harder.
In May, Rolls-Royce announced plans to cut 9,000 jobs across its global workforce and as part of today’s announcement East revealed that, so far, 4,000 job cuts have happened. In total, 6,000 job losses will come from the firm’s sites across the UK.
Warren East, Chief Executive of Rolls-Royce said: “We ended 2019 with good operational and financial momentum. However, the COVID-19 pandemic has significantly affected our 2020 performance, with an
unprecedented impact on the civil aviation sector with flights grounded across the world.
“We have responded rapidly to increase our liquidity, with £6.1bn at the end of H1 and a further £2.0bn term loan agreed in H2, to help weather the continued uncertainty around the timing and shape of the recovery
in the civil aviation sector. We have made significant progress with our restructuring, which includes
the largest reorganisation of our Civil Aerospace business in our history.
“This restructuring has caused us to take difficult decisions resulting in an unfortunate but necessary reduction in roles. These actions will significantly reduce our cost base, which combined with recovery in Power Systems and continued resilience in Defence, will help us to deliver significantly improved returns as the world recovers from the pandemic.
“While our actions have helped to secure the Group’s immediate future, we recognise the material
uncertainties resulting from COVID-19 and the need to rebuild our balance sheet for the longer term.
“We have identified a number of potential disposals that are expected to generate proceeds of more than £2bn, including ITP Aero and a number of other assets. Furthermore, in light of ongoing uncertainty in the civil aviation sector, we are continuing to assess additional options to strengthen our balance sheet to enable us to emerge from the pandemic well placed to capitalise on the long-term opportunities in all our markets.”
Shares were down 8% in morning trading.