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LONDON (Alliance News) - Rolls-Royce Holdings PLC Wednesday said Chief Executive John Rishton will retire on July 2 and be succeeded by former ARM Holdings CEO Warren East, an unexpected move that was welcomed by markets in the wake of several profit warnings in 2014.
East was CEO of chip designer ARM from 2001 to 2013, and became a non-executive director on the Rolls-Royce board in January 2014. Rolls said it had conducted an "extensive international search" for its new CEO.
"Warren has an outstanding record as CEO of ARM Holdings. He is an engineer by training; he has a deep understanding of technology and of developing long-term partnerships. He has proven strategic and leadership skills in a global business and a strong record of value creation," Rolls-Royce Chairman Ian Davis said in a statement.
"I have a strong desire to return to an executive position with the energy and enthusiasm a role like this demands. 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," East said.
Under Rishton, Rolls-Royce's order book has grown by 24% and the share price has risen 63%, according to the company. He became CEO in March 2011, having previously worked at Ford Motor Co, British Airways and Dutch retailer Royal Ahold.
However, the aircraft and ship engine maker has had a difficult couple of years, with its defence markets suffering from a squeeze on defence budgets in the US and UK in the wake of the financial crisis and as military operations in conflict zones like Iraq and Afghanistan were scaled back. That has been largely offset by continued strong demand for engines for commercial jets.
In February last year it surprised markets by warning that it expected a pause in overall profit and revenue growth in 2014 due to falling revenue in its defence businesses and lower marine unit revenue. In May, it then cut the guidance for its marine unit, and in October it warned that the outlook for 2015 had also become more challenging. Its shares fell 32% over the course of 2014, from an all-time high of 1,294.00 pence on January 6.
However, the shares have been recovering in 2015, with the stock up 18.6% year to date. It had again scaled back profit expectations for this year in February, The company got a major boost last week when it won its largest-ever order, a USD9.2 billion deal to provide engines and support for 50 Airbus A380 aircraft that Emirates has ordered.
East told the Financial Times Wednesday that he plans to continue the restructuring job begun by Rishton, although the paper said he hinted there could be greater and faster change using his experience of building ARM Holdings.
Under East, ARM grew from being a small technology company to one of the world's biggest chip companies, providing chip designs to consumer giants like Apple Inc and Samsung Electronics and competing with more established chip companies like Intel Corp.
East is also a non-executive director on the boards of BT PLC, money printer De La Rue PLC, vacuum cleaner and hand-dryer manufacturer Dyson, memory card maker Micron Inc and Digital Catapult, a national centre that promotes and accelerates the best digital ideas coming out of the UK in data management, but Rolls-Royce said he intends to step down from all but one of those roles in line with the company's policy. BT later announced that East would be stepping down as a non-executive on its board on May 31.
Rolls-Royce shares were up 3.7% at 1,044.66 pence Wednesday morning, making it the best-performing stock in the FTSE 100 on the day.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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