Rolls fires up the engines in search for its next boss
ROLLs-ROYCE has fired the starting gun on finding a replacement for chief executive Warren East as the engineering giant rebuilds after the Covid crisis.
Chairman Anita Frew has begun drawing up a list of successors for East, who has led the most prestigious name in British engineering since 2015.
East has not announced plans to step down but it is thought he could leave as soon as this year. “Analysts believe he may leave the FTsE 100 group once it completes a three-pronged recovery strategy he has promised investors.”
Industry insiders said Rolls was taking a close look at the bosses of FTsElisted defence companies as possible successors. The company is thought to be using recruitment group MWM Consulting to draw up the lists.
Before the pandemic, the Derbybased engineer earned around half its turnover from servicing large plane engines.
This meant a large chunk of its revenue depended on how many hours the planes flew and that when the pandemic grounded planes for months on end it lost a key source of revenue.
It plunged to dizzying losses, major credit agencies slashed its credit rating to junk status and it rapidly burned through cash.
Defence now makes up around a third of the business and it is becoming less reliant on its work on big plane engines, or its ‘civil aerospace’ division.
One source said that it was a ‘different business now’ and that a chief executive would need to reflect that.
The company’s rules dictate that at least one of the chairman and chief executive must be a British national.
As Frew is a UK national, this means the new boss could be an international hire.
Before East took over, he spent more than a decade leading Arm Holdings, the Cambridge-based technology group that is in the process of being sold to Us chip group nvidia.
When he joined, he kicked off a restructuring to cut out layers of bloated middle management to trim down costs.
But when Covid hit, he was forced launch the third shakeup Rolls had seen in six years. To combat the crisis, Rolls kicked off a wide-ranging overhaul that included cutting 9,000 jobs from its 52,000-strong workforce, raising money and selling off parts of the business.
It has raised £7.5bn since the pandemic began, including a £2bn share sale.
East promised investors his strategy would stop the company burning through cash, which it achieved last year, to sell divisions of the group worth £2bn and slash its costs by £1.3bn. Rolls is on track to reach the disposals target this summer with the sale of spanish aerospace unit ITP Aero to Bain Capital.
In a recent trading update Rolls said it was likely to hit the £1.3bn cost savings goal by the end of this year. The company has also made huge progress with a longrunning project to build mini nuclear power plants that it calls small modular reactors.
The SMR project has been separated into a standalone company called Rolls-Royce sMR last year, in which Rolls has an 80pc holding. A Rolls spokesman said: ‘All large organisations regularly review the market to identify future talent and it is one of the board’s duties to ensure we have robust succession plans for senior roles. If there were any actual changes, we would of course make an announcement to the stock exchange.’