Rolls-Royce CEO Replaces Finance Chief in Management Shake Up -- Update

By Robert Wall 

LONDON-- Rolls-Royce Holdings PLC boss Warren East is replacing his finance chief in a move that amplifies the scale of the shake up under way at the British aircraft-engine makers after a series of profit setbacks and a dividend cut.

Rolls-Royce's chief executive is bringing in Stephen Daintith, 52, to replace current Chief Financial Officer David Smith who is set to leave the company next year after a transition period.

Mr. Daintith is CFO at Daily Mail & General Trust PLC, the British newspaper and magazine publisher, and previously an executive at Dow Jones, the publisher of The Wall Street Journal.

The move is the highest-profile management change on Mr. East's watch since he took the helm at the London-based company last year. Mr. East arrived after a series of profit warnings at Rolls-Royce disappointed investors, sending the stock price tumbling. Other departures since have included the head of the company's aerospace operations and its land and sea activities.

The appointment of Mr. Daintith also adds another executive with little manufacturing experience at a time Rolls-Royce faces an unprecedented ramp-up in output for large commercial jetliner engines for plane makers Boeing Co. and Airbus Group SE. Mr. East previously worked at computer chip maker ARM Holdings PLC.

The news initially unnerved investors, with Rolls-Royce shares falling around 2% in early trading.

To help plug the gap in operational experience, Mr. East this month announced Simon Kirby would join as chief operating officer. He currently runs government-owned HS2 Ltd., the company charged with building a new high-speed rail system in the U.K. and with prior experience in the British defense industry.

Rolls-Royce, which no longer is affiliated with the luxury car maker, said the precise date when Mr. Daintith would join and his predecessor would depart haven't been fixed yet.

Rolls-Royce has been struggling with weak demand for some of its aircraft engines. The prolonged slump in oil prices also has damped sales of its marine and power-systems units. The London-based company this year announced the first cut in its dividend since 1992 to deal with falling earnings.

Mr. East has been trying to streamline the company and announced plans to eliminate at least 600 management positions, most at its aircraft engine unit, to deliver cost savings and boost profitability. Rolls-Royce also is shedding 2,600 other jobs at its aerospace unit and 1,000 in its marine business to achieve GBP150 million ($195 million) to GBP200 million in annual cost savings by the end of next year.

Mr. Daintith had "deep understanding of international business and his record of achievement in change management are particularly relevant to Rolls-Royce as we build our business and respond to the growing global requirement for our technology," Mr. East said.

Mr. Smith joined Rolls-Royce in January 2014 as CFO of the aerospace division and was elevated to role at the corporate level less than a year later after 27-year company veteran Mark Morris departed after a series of profit warnings.

Mr. Daintith will receive a base salary of GBP680,000 ($882,800).

Write to Robert Wall at [e-mail]

(END) Dow Jones Newswires

September 22, 2016 04:01 ET (08:01 GMT)

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