Rolls-Royce has announced its chief executive Warren East will stand down at the end of this year, shocking investors who wiped £1.5bn off the market value of the aero-engine maker.
The 60-year old, appointed CEO in 2015 to turnaround a business beleaguered by years of scandals and a string of profit warnings, said that “this is the right moment to look to the future”.
The surprise news rattled investors, as Rolls-Royce’s board announced the start of a hunt for a successor, with shares in the company plummeting as much as 18% giving it a market value of $8.1bn.
The announcement overshadowed the company’s full-year results which showed that the engine-maker has weathered the worst of the pandemic and returned to profit last year.
A £124m profit for 2021 compared with a loss of £3bn in 2020, when income, derived from the hours its engines are flown by airline customers, plummeted as the travel industry was grounded at the height of the pandemic.
Rolls-Royce remained cautious on its outlook for this year saying it expected to generate “modestly positive” free cash flow this year.
The company said it has achieved its restructuring target of £1.3bn savings, made in part by axing 9,000 jobs, a fifth of its global workforce.
“We have achieved the benefits of our restructuring programme a year ahead of schedule, positioning civil aerospace to capitalise on increasing international travel,” said East.
“It is a privilege to lead Rolls-Royce – it’s a job which I thoroughly enjoy. There have been challenges, but we have built on the cultural and organisational improvements we have made to work through them, deliver on our commitments and create a better business.”