Rolls-Royce Holdings PLC (LSE:RR.) shareholder Causeway Capital Management has called on the aero-engine maker’s incoming chair to refresh its board, according to a report in the Financial Times.
Jonathan Eng, portfolio manager of the US investment group which holds just under 9% of Rolls-Royce, told the FT that he would like Anita Frew, who takes over as chair of the FTSE 100 group in October, to consider whether it has the right expertise at the top.
“I really believe the board needs some fresh thinking. The company is facing some challenges,” Eng said.
Rolls-Royce announced in June that it had appointed Frew as its new chair, the first time a woman has held the top position at the aero-engine powerhouse.
She joins the group as it tries to recover from the downturn caused by the Covid-19 pandemic. The company’s revenues fell last year as airlines stopped flying, and it had to shore up its balance sheet with new equity and debt of £7.3bn. The engineer returned to profit in the first half of 2021 and said it was confident of generating cash again by the end of the year.
Eng told the FT that Rolls-Royce needs to make sure it has the right expertise to tackle the decarbonisation challenge. Frew should also consider the board’s engineering expertise given the company’s durability problems on the Trent 1000 engines and any relevant experience on health issues given the pandemic, he added.
“I will be asking [Frew], do we have the right people now that will ask the questions when sticky situations come up because they will come up,” said Eng.
Rolls-Royce told the FT it regularly reviews the “effectiveness, composition and skillset” of its board.
Eng also called on the group to consider the future of its power systems business in the next three years.
He noted that the company has done a “really good job” cutting its cost base and is close to fixing the Trent 1000 problems. It now has over 50% of the large, wide-body civil aerospace market, putting it in a strong position.
“Covid has really woken up a lot of management teams and [they] have said, hey, we’ve got to change,” Eng said.