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Rolls-Royce’s new CEO says focus will be on opportunity and strategic clarity

Three years ago, Tofan Arginbiljic lost the race for the top job at BP. After 23 years at the oil company, then as head of its refining and marketing operations, he left in March 2020.

This week Erginbilgic returned to the company’s spotlight after being chosen to head another British industrial giant, Rolls-Royce. The 62-year-old, a dual Turkish and British citizen, will replace Warren East as chief executive in January.

The appointment surprised some industry experts, who expected a big hit with connections in the City of London and Whitehall. “What makes him think he’s fit to run Rolls Royce?” asked one.

Erginbilgic cites his experience at BP, where he spent “a lot of time” in the energy transition, as relevant. Like Rolls-Royce, he told the Financial Times this week, the energy group had a very successful cash-generating business but needed to invest for a low-carbon world.

“I come into Rolls-Royce with a focus on how we can create a great opportunity for all stakeholders,” he said. “My focus is on strategic clarity.”

Those who worked closely with him say he is a good operator. Tony Hayward, the former BP chief executive who made Arginbilgic his chief of staff, said the incoming chief executive “is tough and his style is quite tough but he builds great teams and has a strong track record of delivery. He is a good appointment for Rolls-Royce at this stage.” .

Erginbilgic, whose main role since leaving BP has been as a partner at private equity group Global Infrastructure Partners, will take on one of the toughest jobs in British industry.

One of Britain’s oldest industrial names, Rolls-Royce brings with it a level of political and public scrutiny that the new chief will have to navigate carefully. The British government still holds a “golden share”, which allows it to block any takeover. Erginbilgic will need to develop relationships in Whitehall, as well as with key customers Airbus and Boeing.

Samuel Johar, chairman of board advisory group Buchanan Harvey, said that while Erjinbiljic was “clearly a successful divisional CEO”, the promotion to group CEO “is always important because strategy, external stakeholders and public scrutiny play a role Much bigger. “

Champion Engineering, a world leader in the production of engines for large passenger aircraft, is still recovering from one of the most difficult crises in its 116-year history. The pandemic has led to the grounding of much of the global fleet, forcing Rolls-Royce to shore up its balance sheet with £7.3bn of New equity and debt. The restructuring and asset disposal program launched by East is almost complete, but the company is just starting to generate cash again.

An engineer by training, Erginbilgic began his career in the oil industry at Mobil in 1990 before moving to BP in 1997. He held several positions in the “rebel” division of lubricants, refining and marketing of the company, spending time in Turkey and throughout Europe.

After two years heading the CEO’s office — a stepping stone for those considered future leaders and where he worked closely with Hayward — Arjinbiljic was promoted to chief operating officer of the downstream division. He became its head in 2014 after Ian Kuhn left to join for centricity.

Before appointing Erginbilgic, Rolls-Royce chairman Anita Perrault had already made it clear that the board was looking for an experienced manager with a track record of operational excellence across continents.

It should be someone “accustomed to a large and complex global industrial business”, she told the Financial Times. Last month.

On that front, Erginbilgic ticks the box. People familiar with his time at BP credit him with strong industrial expertise with a relentless focus on performance and cost reduction.

He is “quite a technocrat,” one of the people said. “In his time he really took the business to pieces and put it back together again. He turned it around in terms of profit.”

For investors in Rolls Royce, whose recent history is marked by a A series of transformation programs Having never succeeded, Erginbilgic’s focus on the bottom line could be a breath of fresh air.

But he will have to balance that with difficult economic conditions. Concerns about high inflation and supply chain constraints are high, while morale among company workers has taken a hit after thousands of layoffs during the pandemic. The challenge of decarbonization is also great – and will require investment as well as partnerships.

“It’s an interesting appointment – he’s older than the current CEO,” said one person close to BP. “He’s the exact opposite of Bernard Looney [BP’s current CEO]: He’s not a waking, charming, social media star. He is not human. He is quite severe in his behavior.”

“Performance is what he does, but performance without EQ can be a challenge. The relationship he has with the chair, Anita Perrault, will be important as she fills in some of the gaps,” the person added.

Despite the challenges, Erginbilgic inherits a company that is growing from an extensive restructuring within the Middle East and when international flights began to recover. Airlines are returning to the market of wide-body aircraft that fly with the group’s engines. If the recovery takes off, it could still provide a welcome tailwind for Rolls-Royce and its new CEO.

Rolls-Royce’s new CEO says focus will be on opportunity and strategic clarity Source link Rolls-Royce’s new CEO says focus will be on opportunity and strategic clarity

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