Rolls-Royce boss turns to former BP executive to lead overhaul

The new head of Rolls-Royce has turned to an executive from oil major BP, his previous employer, to lead a sweeping overhaul of Britain’s flagship engineering group.

Tufan Erginbilgic has brought in Nicola Grady-Smith to be Rolls-Royce’s chief transformation officer, in his first external appointment since taking the helm at the start of the year, according to the company.

The move by Erginbilgic, who last month described the group as a “burning platform”, is expected to shake up the engineer again, just as the group is emerging from an overhaul by his predecessor Warren East.

East was forced to axe 9,000 jobs to save £1.3bn in costs following the coronavirus pandemic.

Grady-Smith will be in charge of a transformation programme launched by Erginbilgic last month that is focused on “efficiency and optimisation” to help lift profit margins and compete with bigger rivals such as General Electric of the US.

During her almost two-decade career at BP, she held several senior roles, latterly in the company’s City & Corporate Integrated Solutions division that focuses on providing integrated services to major customers of the energy group. The division offers bespoke solutions using different BP technologies to help companies or cities to reduce carbon emissions.

She also led the group’s UK retail business and worked under Erginbilgic as his chief of staff when he ran its refining and marketing operations.

“All my roles have involved significant change or transformation to create value for stakeholders . . . I’m passionate about building capabilities for Rolls-Royce to succeed,” Grady-Smith wrote on social media.

Erginbilgic has wasted little time putting his mark on the group. He bluntly told employees in a company-wide address last month, parts of which were leaked to the Financial Times, that Rolls-Royce must transform the way it operates or it will not survive.

His comments sent shares in the FTSE 100 group down about 4 per cent on the day, although they have recovered and were trading at 108p by late afternoon in London on Monday.

“Every investment we make, we destroy value,” he told employees last month, adding that financially, “we underperform every key competitor out there”.

His comments were widely interpreted as a signal to staff to expect another round of job cuts, in particular among white-collar workers.

The brutal assessment follows the grounding of international air travel that severely dented the group’s civil aerospace business, which still generates 40 per cent of the engineer’s underlying revenues.

Although the company is on course to have met its 2022 targets for revenue growth and “modestly positive” free cash flow, its balance sheet remains laden with debt.

Analysts said at the time of Erginbilgic’s remarks that further restructuring would help restore Rolls-Royce’s margins closer to those of its peers.

“We would welcome further restructuring announcements and especially a tighter focus on investment as the group research and development spend has remained elevated since 2014, despite the lack of meaningful opportunities within its civil business,” wrote Chloe Lemarie at Jefferies.

Rolls-Royce said Grady-Smith started her new role on February 1 and would report to Erginbilgic. She was an “experienced leader with extensive international turnround experience and a proven record of delivery”.

“As Tufan made clear to employees last month, we need to significantly improve the performance of Rolls-Royce and Nicola will be instrumental in achieving that. We report our 2022 results on February 23 and will give further details at that time.”