By Robert Wall
LONDON--Rolls-Royce Holdings PLC (RR.LN) chairman, Ian Davis,
said the engine maker's strategy to work on sectors spanning ships,
land-based turbines and airplanes wouldn't change, as the company
said Warren East would replace John Rishton as chief executive.
"I and the board are very comfortable with the strategic
direction of the company," Mr. Davis said in an interview.
Rolls-Royce said Wednesday that Mr. Rishton would retire in
July. The company's share price has lagged rivals amid profit
warnings and problems because of weakness in some key markets.
Earnings, particularly in its land and marine engine business, have
been hit by low oil prices, prompting some calls for the company to
focus on its growing aircraft engine business.
"One bumpy year financially…doesn't rubbish the strategy
immediately," Mr. Davis said.
Incoming chief executive, Mr. East--who was already on the
Rolls-Royce board as a non-executive director--said the near-term
focus would be on driving restructuring measures put in place by
Mr. Rishton. "This is not a business that changes in the short
term," he said, adding that "naturally, over many years, the
strategy evolves."
One of the issues for the new Rolls-Royce management team will
be figuring out how to re-enter the narrowbody aircraft engine
market: by far the largest sector of commercial flying. Rolls-Royce
was a partner with Pratt & Whitney, the engine unit of United
Technologies Corp., before exiting several years ago as it opted
not to invest in a new turbine design.
Mr. Davis said he wanted Rolls-Royce to re-enter that sector,
though echoed Mr. Rishton's view that doing so wouldn't be done
alone because of the scale of the financial commitment and risk of
such a project. "Partnering in some form is a very important part
of our approach to get into the narrowbody," he said.
Write to Robert Wall at robert.wall@wsj.com
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