Rolls-Royce plans overhaul after new boss calls it ‘burning platform’

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The new boss of Rolls-Royce has launched a strategic review of the business just weeks after he described the engineering giant as “a burning platform”.

Tufan Erginbilgic, who took over from Warren East as chief executive last month, said shareholders would not receive a dividend for 2022 as he vowed to boost profits and investor returns.

Shares in the company surged 19pc in early trading after it said it has identified seven key areas where it will seek improvements, from working capital to investment priorities and its culture.

Mr Erginbilgic, who spent two decades at BP, is pushing for Rolls-Royce to transform its operations, calling it a “burning platform,” the Financial Times reported last month. He’s already shaken up operations after moving out the head of the civil aerospace unit while also bringing in BP veteran Nicola Grady-Smith as his chief transformation officer.

There will be no dividend for last year, despite posting underlying operating profits of £652m for 2022, ahead of analyst estimates of £489m.

The business struggled as long-haul air travel was slower to recover from the pandemic than other sectors of the aviation industry.

Revenue was also higher than expected at £12.7bn, a rise of 14pc compared with a year earlier.

Mr Erginbilgic said: “While our performance improved in 2022, we are capable of much more.

“Our transformation programme will improve our efficiency and commercial outcomes, and deliver a sustainable reduction in working capital.

“This will require a winning culture, underpinned by more effective performance management and a shared determination to deliver cash and reduce debt.

“Our success will enable us to reward investors for their support and invest in future growth.

“Our transformation programme is already underway and is moving at pace.

“It will include a strategic review so that we can prioritise our investment towards the most profitable opportunities.

“We will report the findings together with our medium-term goals in the second half of this year.”