The new CEO of rolls royce faces an uphill battle to return the engineering giant to healthy profits and deal with its ‘bloated’ middle management, according to industry sources.
Tufan Erginbilgic, who officially starts his new job today, is expected to present his vision for the company in full-year results in February, in just 53 days.
The Turkish businessman has been nicknamed ‘Turbo’ Tufan for his track record in revitalizing companies and accelerating their performance.
New blood: Rolls boss Tufan Erginbilgic is expected to set out his vision for the company in full-year results in February.
She spent several years running a division of BP that oversees its gas stations, leading to record profits.
The aircraft engine maker is one of three FTSE 100 companies preparing for a changing of the guard today, with Shell boss Ben van Beurden handing over the reins to former company man Wael Sawan and the Vodafone boss Nick Read resigning after months of poor telecom performance. business. Read’s successor has yet to be designated.
It is arguably Erginbilgic who has the most difficult task on his hands after a tumultuous period for the beleaguered company, the most prestigious name in British engineering. Rolls has been in crisis since 2014.
When outgoing boss Warren East took over in 2015, he had to manage profit warnings, a £2.4bn bill to compensate airlines for faulty Trent 1000 engines, oversee a £671m settlement over a bribery scandal and recently dealing with the fallout from Covid.
The pandemic dealt a heavy blow to Rolls’ main source of income: the construction and maintenance of aircraft engines.
It lost around £6bn in cash during the crisis and was forced to sell £2bn worth of businesses and raise money from shareholders and new debt. East recently admitted that Rolls came close to collapsing in the early months of the pandemic.
Erginbilgic is expected to present plans for a review of the group next month, which would be the fourth since 2014.
Although the company is poised to break even this year, it is a long way from making windfall profits. ‘Tufan has a strong track record of improving financial performance. Realistically this is what we have to do,” said a Rolls member.
In charge: Head of Shell Wael Sawan
Thousands of jobs were cut for blue-collar factory teams during the pandemic. The source said the next wave could focus on middle management and address “duplication” of roles in its three main divisions: defense, energy systems and civil aerospace.
“I would be very surprised if Tufan doesn’t want to take a look at the white-collar workforce,” the source said. ‘Warren talked a lot about bloated middle management. There is a lot of bureaucracy in the business.’
But independent aerospace analyst Howard Wheeldon said another big turnaround “wouldn’t be as good as some people are hoping,” adding: “Investors don’t want another turnaround period.”
Rolls-Royce declined to comment. At Shell, oil and gas analysts expect things to stay much the same under new boss Sawan, who has worked there for 25 years.
He is expected to lead the group through a costly transition to become a green energy giant. But unlike Erginbilgic, Sawan is taking the hot seat at a time when Shell is making near-record profits during the energy crisis.
Stuart Lamont, deputy head of wealth manager RBC Brewin Dolphin, said: “You are taking over a company that is in poor health. I don’t think there’s going to be a dramatic change in strategy, it’s likely to be a continuation of what we’ve seen in recent years.”
Vodafone has appointed chief financial officer Margherita Della Valle as interim chief executive while it seeks a replacement for Read, who has been with the group for 20 years.
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