Aerospace parts specialist Arconic Inc. named former General Electric Co. executive Chip Blankenship as its new chief executive, seeking to bring an end to a year of management turmoil that included a bitter fight with an activist investor and the sudden resignation of its former chief.
Mr. Blankenship, the former head of GE's appliance business, will become Arconic's CEO on Jan. 15., the company said Monday. Interim CEO David Hess, who has run the company since April, will stay as a director.
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The appointment came as Arconic missed quarterly earnings expectations because of rising aluminum prices and higher-than-expected costs supplying parts for new jet engines built by units of GE and United Technologies Corp., sending its shares down around 10%.
"Arconic needs improvement in performance across the board," Mr. Hess told analysts Monday.
Mr. Blankenship, 51 years old, steps into the top job in the aftermath of a dispute with activist investor Elliott Management Corp. and as the company deals with the fallout from its connection to a fatal June fire at Grenfell Tower in London.
Analysts said Monday's selloff reflects investors' anxiety about whether a new CEO will be able to deliver on the ambitious profit and margin-expansion targets established by his predecessor. "It's the lack of visibility on jet engine [parts] and the costs associated with them," said Josh Sullivan, an analyst for Seaport Global Securities.
Arconic, which separated from aluminum producer Alcoa a year ago, has been beset by operating problems that have kept the company from producing the high margins envisioned by the breakup. Amid shareholder concerns about the future direction and how to fix those issues, the process to hire a leader proved slow. Mr. Blankenship will be expected to install better cost controls and improve persistent efficiency and technical problems weighing on production, particularly in businesses acquired in recent years to expand Arconic's presence in high-value forgings and metals besides aluminum.
"It's important to get Chip in the seat in January and driving the execution at critical time," said Adam Karr of Orbis Investment Management LTD, Arconic's fourth-biggest holder and one who had previously called for change.
Arconic's disappointing performance led to activist investor Elliott Management initiating a campaign earlier this year to replace CEO Executive Klaus Kleinfeld. The ensuing mudslinging, which involved fights over competing slates of board candidates, culminated in April when Mr. Kleinfeld abruptly left the company after he sent a letter to the hedge fund that Elliott perceived as "a threat to intimidate or extort" the firm.
Arconic said Mr. Kleinfeld showed bad judgment, and they mutually decided he would step down. Arconic granted Elliott three more board seats in May.
Mr. Blankenship's hire was called "an excellent selection" by David Miller, Elliott's senior portfolio manager, in a statement issued Monday.
Elliott had pledged to install veteran aerospace executive Larry Lawson as CEO if it managed to gain control of the board. As part of Elliott's May settlement, it had a role in the selection process and talked with Mr. Blankenship and other candidates, ultimately deciding Mr. Blankenship was the best for the job, said some people familiar with the process.
Mr. Blankenship, whose training is in metallurgy and material science engineering, joined GE in 1992, and cycled through several jobs with GE's aircraft engine business. He holds seven patents related to jet engine technology, according to Arconic. He headed GE's appliance business from 2011 until June, following its sale to China's Haier last year. Mr. Blankenship's technical know-how with metals and experience in the aviation industry were key attributes for board members and large shareholders alike.
On Monday, Arconic said that board member John Plant will become board chairman, effective immediately, succeeding interim Chair Pat Russo.
Mr. Plant joined the board in 2016 as an Elliott appointee under an agreement between Mr. Kleinfeld and the hedge fund. He is a former CEO of TRW Automotive.
Arconic continues to face multiple lawsuits and a U.K. inquiry in connection with the Grenfell Tower fire, which killed at least 80 people. Aluminum panels with combustible polyethylene cores produced by Arconic were cited by investors as a factor in the spread of the fire over the building's exterior. Arconic has said that it wasn't involved in the design or installation of the exterior cladding system used at the tower, which included insulation that also burned.
The company reported $7 million in legal and advisory costs in its latest quarter in connection with the fire. Mr. Hess warned of a long inquiry into the fire. "It's not unusual for these things to take a number of years to resolve," he said.
Arconic also on Monday reported a third-quarter profit of $119 million, down roughly 28% from a year ago and shy of analysts' expectations. Revenue rose 3% to $3.2 billion, but the company missed analysts' per-share profit expectation.
The company increased its revenue guidance for the year to $12.6 billion to $12.8 billion, compared with its prior forecast of $12.3 billion to $12.7 billion.
--David Benoit and Allison Prang contributed to this article.
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(END) Dow Jones Newswires
October 23, 2017 16:42 ET (20:42 GMT)