Rolls-Royce PLC Friday said it expects a drop in demand for civil aerospace products and services but 2001 "underlying" earnings per share won't fall below the 2000 level, due to cost-saving actions that include the cut of 10% of its workforce. The UK-based aerospace and defence company said it also expected difficult market conditions for civil aerospace activities in 2002 and 2003.

It said it would cut 3,800 jobs in the U.K. and 1,200 overseas jobs, which will mainly affect employment in the group's aerospace business. The job cuts are expected to be completed by the end of the first quarter of 2002.

Rolls-Royce said its underlying earnings per share for the year to December 2001 is expected to be unchanged from the 2000 result. Net debt for 2001 will be lower than in 2000, the company said. Bureau Report