Rolls-Royce Holdings, the worlds second-largest maker of aero engines, announced on Wednesday that former ARM Holdings CEO Warren East will succeed Chief Executive John Rishton who would retire in July.
The abrupt top management change comes after a series of profit warnings, disagreements with shareholders and a 30% share price slump in 2014. Mr. East, who has been a non-executive director of Rolls-Royce since January 2014, led ARM between 2001 and 2013 and steered the company into becoming one of the worlds leading developers of semi-conductors “with an outstanding record of innovation and a strong commitment to R&D”.
“I am very pleased that Warren East will become the new Chief Executive of Rolls-Royce following John Rishtons retirement,” said Ian Davis, Chairman of Rolls-Royce. “Warren has an outstanding record as CEO of ARM Holdings. He has proven strategic and leadership skills in a global business and a strong record of value creation.”
Rolls-Royce said that Mr. Rishton is stepping down by mutual agreement and will officially retire on July 2nd to seek a “change in lifestyle”. During his 14-year tenure as CEO and CFO, he oversaw a difficult period for the company. Last year, Rolls-Royce announced plans to cut 2 600 jobs and named a new chief financial officer amid the companys first sales drop in a decade.
The British firm warned earlier this year that profits could fall as much as 13% in 2015, following last years 8% decline, due to slowing economic growth and the Ukraine crisis stalling Russian deals.
Mr. Rishtons tenure also saw the company fall under investigation by the Serious Fraud Office for alleged corruption relating to deals in Asia, while also being reprimanded by the Financial Reporting Council for using aggressive accounting practices.
Still, Chairman Ian Davis praised Mr. Rishtons efforts at the helm of the company, saying that he has led the company during a period of significant growth and transformation.
“During his tenure profits have increased by 69%, the order book has grown by 24% and the share price has risen 63%,” Mr. Davis added.
Mr. Rishtons departure comes after one of Rolls-Royces big shareholders, Sequoia Fund Inc, called for management changes earlier this year, describing the companys 2014 performance as “a horror show” and its board as “stubborn and entrenched”. The funds report followed comments last year by Investec Ltd., which suggested that a split of the aerospace business from land and sea would raise Rolls-Royces valuation by a fifth, or it could alternatively sell non-aerospace assets.
Mr. Davis said on Wednesday that no big strategy changes were planned, signaling the board was comfortable with the companys production of engines for ships, planes and land-based power systems.
Apart from being a non-executive director of Rolls-Royce, Mr. East also serves as such on the boards of BT, De La Rue, Dyson, Micron Inc. and Digital Catapult, but will stand down from all but one of his current roles as a Non-Executive Director, in line with Rolls-Royce company policy.
“I have a strong desire to return to an executive position with the energy and enthusiasm a role like this demands,” Mr. East said. “The markets which Rolls Royce serves and the technology it deploys are fascinating. This is a wonderful opportunity and I am very much looking forward to leading this remarkable company.”
Rolls-Royce Holdings Plc traded 3.38% higher at GBX 1 041 per share at 09:25 GMT in London, marking a one-year change of +0.60%. The company is valued at 18.56 billion pounds. According to the Financial Times, the 20 analysts offering 12-month price targets for Rolls-Royce Holding Plc have a median target of GBX 925.00, with a high estimate of GBX 1 200 and a low estimate of GBX 645.00. The median estimate represents a -8.14 % decrease from the last price of GBX 1 007.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
