Rolls-Royce Names HS2 Boss Simon Kirby as Chief Operating Officer

By Robert Wall

LONDON--British aircraft-engine maker Rolls-Royce Holdings PLC has appointed Simon Kirby as chief operating officer as it labors to boost profitability.

The move is the latest by Chief Executive Warren East to rebuild Rolls-Royce in the wake of a series of profit warnings. The company, which is no longer affiliated with the luxury car maker, is bracing for a big ramp-up in production of its commercial aircraft engines to satisfy demand for Airbus Group SE and Boeing Co. long-range jets.

Mr. Kirby, 51 years old, currently runs government-owned HS2 Ltd., the company charged with building a new high-speed rail system in the U.K. He will join Rolls-Royce in the newly created position in the coming months, the London-based company said Saturday.

Mr. Kirby, who previously held jobs in the British defense industry, will be responsible for overseeing efforts to simplify Rolls-Royce's operations in a bid to boost returns, Rolls-Royce said.

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.

Last year, it appointed Mr. East as its CEO. He has since been pushing the company to more quickly revamp its operations to recover from a series of earnings missteps. The company has cut thousands of jobs, including thinning out management ranks to become more responsive to volatile market conditions.

Mr. East said the new chief operating officer, who won't be a board member, would play a "critical role" as Rolls-Royce boost aircraft engine output, grow the nuclear power unit, and implement efforts to cut costs at the company.

Rolls-Royce in July said it made an underlying profit of only GBP77 million ($102 million) in the first six months of the year. The company suffered a GBP1.8 billion loss in the period after a mark-to-market noncash revaluation of U.S. currency hedges in the wake of the sharp fall in sterling after Britain's vote to leave the European Union.

Rolls-Royce also has seen U.S. activist investor ValueAct Capital Management LP become its largest shareholder with a stake of more than 10%. In March, Rolls-Royce appointed Bradley Singer, ValueAct's chief operating officer, to the board.

Rolls-Royce chairman Ian Davis in May told shareholders the path to financial recovery would take time. The company expects a decline in sales and profit this year.

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

(END) Dow Jones Newswires

September 10, 2016 11:09 ET (15:09 GMT)

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