Rolls-Royce Appoints BP Director As Chairman, But SFO Probe Still Hangs Over The Engine Giant

Rolls-Royce's New Chairman Faces Giant Task Ahead Of SFO Probe Announcement

Engine maker Rolls-Royce has posted its 10th year in a row of rising underlying profits - up 24% to £1.4 billion - and announced BP director Ian Davis as its new chairman.

Davis - a former McKinsey man - is well placed to deal with crises having joined BP just a week before it was forced to deal with the Gulf of Mexico Deepwater Horizon oil spill disaster in 2010. He will take over on 2 May, when Sir Simon Robertson steps down after eight years.

His crisis handling will come in handy, as Davis joins Rolls-Royce at a difficult time - in December 2012 it revealed it was being investigated by the Serious Fraud Office over bribery allegations relating to its business dealings with overseas customers.

No update on the probe was offered this morning, but it's understood veteran lawyer Lord Gold has begun reviewing the company's compliance procedures in the past two weeks.

"Impressive as they may be, today's figures from Rolls Royce are just the backdrop to broader issues affecting the iconic engineering giant," Nick Hood, business analyst at Company Watch, told the Huffington Post UK.

"The incoming chairman will find his Inbox clogged with the implications of simultaneous regulatory scrutiny in both the UK and the US, although he brings with him a wealth of relevant experience not least from his time on the board of BP and as the former head of McKinsey.

"The company is fearing the worse, admitting that it may face prosecution in the UK. But for shareholders, the greater worry is management distraction at a time when there is such uncertainty in its key markets and such restrictions on the spending plans of governments around the world."

The group, which has major sites at Derby and Bristol, employs around 45,000 people worldwide. It expects "good growth" to continue into 2013, thanks in part to the strong demand for its Trent aircraft engines, which helped its order book rise 4% to £60.1bn in 2012.

Last year saw the engine-maker add £16.1bn worth of new contracts, including £10.3bn in its civil aerospace division, £1.6bn in defence aerospace and £3.3bn in marine.

There were concerns that the recent grounding of Boeing's 787 Dreamliner jet - which will be powered by Rolls-Royce Trent 1000-TEN engines from 2016 - would impact on the group's future profits forecast, but Rolls chief executive John Rishton insisted the issue had "virtually no impact" on the group.

Roger Johnston, head of industrials at Edison Investment Research, told Press Association: "Rolls has produced another strong set of results, highlighting the benefits of the decade-long strategy, providing consistent results in all economic conditions."

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