Rolls-Royce CEO Replaces Finance Chief

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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. Mr. Daintith, who was considered a potential CEO candidate at his current employer, is expected to join Rolls-Royce early next year.

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 in September 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.

More changes loom at Rolls-Royce. Mr. East has signaled the company may shed some activities, such as in its marine sector.

Rolls-Royce, which no longer is affiliated with the luxury car maker, said profits and sales would fall this year.

Management has about two years to show it is making progress revamping the business after activist investor ValueAct Capital Management LP became its largest shareholder. Bradley Singer, ValueAct's chief operating officer, was named to the Rolls-Royce board in March under an agreement not to push for changes in the company strategy until at least the 2018 annual shareholder meeting.

Rolls-Royce 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 £ 150 million($195 million) to £ 200 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 £ 680,000($882,800).

Write to Robert Wall at robert.wall@wsj.com


  (END) Dow Jones Newswires
  09-22-160415ET
  Copyright (c) 2016 Dow Jones & Company, Inc.



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