Can ‘Turbo’ Tufan rev up profits at Rolls-Royce?

The new CEO of Rolls Royce faces an uphill battle to get the tech giant back to healthy profits and address its “bloated” middle management, according to industry sources.

Tufan Erginbilgic, who officially starts his new job today, is expected to set out his vision for the company at the annual results in February – in just 53 days.

The Turkish businessman has been nicknamed ‘Turbo’ Tufan because of his track record in revitalizing companies and accelerating their performance.

For several years he led a division of BP that oversees petrol stations and pushed it to record profits.

The aircraft engine maker is one of three FTSE 100 companies bracing for a changing of the guard today – with Shell boss Ben van Beurden handing over the reins to former company executive Wael Sawan and Vodafone boss Nick Read who resigns after months of underperformance by the telecoms company. Read’s successor has yet to be named.

Arguably, Erginbilgic has the toughest job following a tumultuous period for the beleaguered company – the most prestigious name in the British engineering world. Rolls has been in turmoil since 2014.

When outgoing chief Warren East took over in 2015, he had to manage profit warnings, pay a £2.4 billion bill to compensate airlines for defective Trent 1000 engines, oversee a £671 million settlement for a bribery scandal and , recently, struggling with the effects of Covid.

The pandemic has dealt a hard blow to Rolls’ main source of income: building and servicing aircraft engines.

It lost around £6bn in cash during the crisis and was forced to sell £2bn worth of businesses and raise money from shareholders and take on new debt. East recently admitted that Rolls was on the brink of collapse in the early months of the pandemic.

Next month, Erginbilgic is expected to draw up plans for a review of the group – its fourth since 2014.

While the company will break even this year, it is still a long way from making bumper profits. Tufan has a strong track record of improving financial performance. Realistically, this is what we need to do,” said a Rolls insider.

Thousands of jobs have been cut from worker factory teams during the pandemic. The source said the next wave could target middle management and tackle the “duplication” of roles in the three main divisions: defence, energy systems and civilian aerospace.

“I would be very surprised if Tufan wouldn’t look at the servants,” the insider said. Warren talked a lot about the bloated middle management. There’s a lot of bureaucracy in the business.’

But independent aerospace analyst Howard Wheeldon said another major turnaround won’t go “as well as some people expect,” adding: “Investors don’t want another period of change.”

Rolls-Royce declined to comment. At Shell, oil and gas analysts expect things to remain broadly the same under the new boss Sawan, who has worked there for 25 years.

He is expected to guide the group through a costly transition to a green energy giant. But, unlike Erginbilgic, Sawan takes the lead at a time when Shell is making near-record profits during the energy crisis.

Stuart Lamont, deputy director at asset manager RBC Brewin Dolphin, said: ‘He is taking over a company that is in poor health. I don’t think there will be a dramatic change of strategy, it will probably be a continuation of what we’ve seen in recent years.”

Vodafone has appointed finance boss Margherita Della Valle as interim chief executive as it searches for a replacement for Read, who spent 20 years with the group.