The Daily Telegraph

Biggest Rolls investor calls for board shake-up

- By Rachel Millard

THE biggest shareholde­r in Rolls-royce has called for a shake-up of the engineerin­g titan’s board as it seeks to recover from the pandemic.

California-based Causeway Capital Management, which has a 9pc stake, said the FTSE 100 company needed “fresh thinking” to face its challenges and could also consider selling its power systems business.

Portfolio manager Jonathan Eng made the public interventi­on as Anita Frew prepares to take over as chairman at the start of October, replacing Sir Ian Davis.

“I really believe the board needs some fresh thinking. The company is facing some challenges … I will be asking [Frew], do we have the right people now that will ask the questions when sticky situations come up because they will come up,” he told the Financial Times.

Warren East, the chief executive of Rolls, wants to make it into a leader in emerging small modular nuclear reactors, which he believes could eventually outstrip its aero engines division.

Mr Eng told the FT that Rolls’ board had been “fine for what it was” but urged Ms Frew to consider whether it had enough expertise to tackle both decarbonis­ation and engineerin­g challenges.

Rolls-royce’s power systems business makes engines and equipment for ships and power generation and analysts say it could fetch more than £3.5bn.

Urging Rolls to consider the division’s

future, Mr Eng said Rolls could “become an aerospace and defence company and they can fix their balance sheet issue in one go”.

As well as Mr East, the Rolls board includes Sir Kevin Smith, the former chief executive of engineer GKN; Beverly Goulet, a former executive at American Airlines; and George Culmer, former finance chief at Lloyds Banking Group.

A spokesman for Rollsroyce said: “We regularly review the effectiven­ess, compositio­n and skill set of our board, using independen­t advice and benchmarki­ng, and engage in robust succession planning to ensure that we have the talent and capabiliti­es required to secure the long-term sustainabl­e success of the company”.

Causeway first invested in Rolls-royce in 2018 and has steadily increased its stake, bringing it from 7pc to 9pc this year.

Rolls made sales of £16.6bn in 2019, of which just over half came from its civil aerospace business that makes and maintains engines for commercial aircraft. That income collapsed during the pandemic. Shares fell by more than four fifths during 2020 to as low as 39p, but have since recovered to 116p.

The group has also struggled with costly problems with its Trent 1000 engines.

Rolls has moved back into the black, making £307m profit in the first half of 2021, compared with a £1.6bn loss in the first half of 2020.

Newspapers in English

Newspapers from United Kingdom