RYCEY Rolls Royce Holdings PLC (PK)

By Ian Walker and Robert Wall 

LONDON-- Rolls-Royce Holdings PLC Chief Executive Warren East on Wednesday unveiled a top-level management overhaul that undoes many of the changes implemented in recent years at the British engine maker that have failed to deliver the intended turn around.

Mr. East, already saddled with two profit warnings in less than six months in the job, on Wednesday announced that two of the company's top executives would exit the company. The existing division structure would be scrapped from next year for one the new CEO executive promises will allow faster decision making.

Tony Wood, the president of the aerospace division that delivers the bulk of the business's profit, would exit the company. Lawrie Haynes, currently president of its land and sea business, will retire. Both will remain with the company into 2016 to assist with its transition to the new structure, it said.

Rolls-Royce has been reeling from financial problems amid weakness in core markets where the company failed to adapt rapidly enough. Demand for some of its most profitable aircraft engines has dried up faster than expected, and sales of turbines for ships and power stations have fallen sharply.

Shares in Rolls-Royce have dropped 35% this year and the company warned it may cut its dividend.

Mr. East last month signaled a new management structure would be put in place before the year-end as he warned that turning around the company would take time.

"The changes we are announcing today are the first important steps in driving operational excellence and returning Rolls-Royce to its long-term trend of profitable growth," Mr. East said.

Rolls-Royce faces investor pressure to act. U.S. activist investor ValueAct Capital Management LP has become its largest shareholder and is seeking a board seat.

Neil Woodford, a highly regarded British investment fund manager, who has held Rolls-Royce stock for almost a decade, said his CF Woodford Equity Income Fund and the Woodford Patient Capital Trust fund have sold their Rolls-Royce shares. He cited a lack of confidence in Rolls-Royce's near-term prospects for the decision.

The move announced Wednesday reverses management changes implemented by Mr. East's predecessor aimed at boosting efficiency. It put one executive in charge for all aerospace programs and another for its land and sea activities.

Under the new management structure that is due to take effect at the start of 2016, London-based Rolls-Royce, which makes aircraft engines for Boeing Co.and Airbus Group SE widebody jets, will operate as five market-facing businesses, with the presidents of Civil Aerospace, Defense Aerospace, Marine, Nuclear and Power Systems all reporting directly to Mr. East.

Rolls-Royce said it would disclose costs from the restructuring in February.

Robert Wall contributed to this article.

Write to Ian Walker at ian.walker@wsj.com

(END) Dow Jones Newswires

December 16, 2015 04:05 ET (09:05 GMT)

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