Hexcel drops after surprise appointment of former Spirit Aero chief as CEO
10/04/2024 18:47
April 10 (Reuters) - Hexcel's HXL.N surprise
appointment of the former top boss of troubled aerospace
supplier Spirit AeroSystems SPR.N as its new CEO spooked
investors on Wednesday, sparking a 12% fall in its shares.
Hexcel, which supplies composite parts such as carbon fibers
and structural adhesives to Boeing BA.N and Airbus AIR.PA ,
said on Tuesday current chief Nick Stanage will transition to an
executive chairman role and will retire at the end of the year.
"We note the surprising nature of this announcement as the
company did not communicate to the market that it had been
pursuing new leadership," BofA Securities wrote in a note, while
downgrading the stock to "underperform" from "neutral".
Tom Gentile, who will take over as Hexcel CEO, stepped down
from his role at Spirit Aero in October after a series of
industrial challenges left the supplier struggling to stabilize
cash flows. He had been the top boss of the company since 2016.
Spirit's shares declined more than 60% while he was the CEO.
His tenure was marked by a series of supply chain challenges and
production defects, most recently misdrilled holes on the Boeing
737 MAX aft pressure bulkhead.
The company has also been under regulatory scrutiny in
recent months following the mid-air cabin panel blowout of a
Boeing 737 MAX 9 jet, the fuselage for which was made by Spirit.
"We question whether his tenure with a heavily
Boeing-related supplier will translate well to Hexcel, which has
more business with Airbus," wrote Ken Herbert of RBC Capital
Markets in a note.
Hexcel said Gentile's appointment as CEO and President
followed a "comprehensive succession process". He is expected to
assume the role on May 1 and be appointed to the board following
the annual shareholder meeting on May 2.
Before the announcement, Hexcel shares had gained roughly 7%
in the last 12 months. Its shares trade about 28.69 times their
forward profit estimates, well below rival Spirit's 42.67
multiple.
(Reporting by Pratyush Thakur and Aishwarya Jain in Bengaluru;
Editing by Krishna Chandra Eluri)
((pratyush.thakur@thomsonreuters.com;))