Rolls-Royce Holdings Plc, a maker of jet engines, may be announcing a plan to cut 400 management jobs in its flagging marine division, people with knowledge of the matter told the Financial Times.
The job cuts are the company's attempt to increase the confidence in diversification strategy that is being challenged by investors.
ValueAct, the U.S. activist that is one of Rolls-Royce's biggest shareholders, wants the company to focus on the civil aero-engine business, according to the Financial Times.
The aero-engine business is riding on a current boom in aircraft orders.
However, Warren East, the CEO of Rolls-Royce, has already shown his support on the company's diversification into land and sea propulsion, according to the Financial Times.
He said that the diversification is "broadly correct" to counter the group's dependency on aerospace.
The Financial Times also reported that East's goal in restructuring the marine division is to strip out the management layers and rebase costs in a business that is heavily dependent on the oil and gas industry.
These industries have been struggling with low oil prices.
The Financial Times also mentioned that the cuts are part of a longer-term plan to shift the focus of the marine division's operations towards Asia, where labor is cheaper and the market still growing.
The operations of Rolls-Royce marine division are currently centered on Scandinavian countries, where costs are high.
Rolls-Royce is also intending to outsource more of the marine division's manufacturing, according to the Financial Times.
However, the company still plans to retain in Northern Europe its high-value research and systems integration.
The Financial Times added that the restructuring follows Rolls-Royce announcement five months ago that it will cut 600 factory jobs in the marine division.
The two moves are expected to slash more than £50 million or more than $75 million in the company's annual costs in the marine business within 18 months.
Reuters also stated that last year, Rolls-Royce already announced several thousand job cuts that the company plans to accomplish within 18 months.
Rolls-Royce announced in November last year that it plans to cut 2,600 jobs, mostly in the aerospace division.
According to the report, the cuts are part of a plan to boost profitability in the Rolls-Royce aerospace division.
The margins from the division have lagged against its bigger rival General Electric.
