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26 July 2013 | Adam Leach
Global manufacturer Rolls-Royce is planning to cut its unit and supplier costs to widen its profit margin, the company has announced.
In the business’ half-year results published yesterday, the company reported while underlying profits had increased by 34 per cent, it had suffered a pre-tax loss of £491 million, owing in part to losses from hedging commodities. To rectify the loss, the company pledged to do more to reduce its cost base.
John Rishton, chief executive at Rolls-Royce, said in a statement: “It is clear we have a lot more to do on cost (and cash). Fortunately we have significant opportunities to improve both, but this will take time and firm resolve to deliver.”
While specific savings targets have not been announced, SM understands the supply chain is viewed as a key area in which to make savings. Due to competition within the markets it operates, that include aerospace and energy, the company has little flexibility on the pricing side, so bearing down on costs offers it the greatest opportunity to increase profit margin.
Last month, the company announced that it is working with defence company EADS on developing a hybrid-engine for airliners. The engine, which is still in the development stages would reduce carbon dioxide emissions and reduce fuel burn off.