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RPT-UPDATE 2-Cape names new CEO to tackle Algeria troubles
May 30, 2012 / 7:07 AM / 6 years ago

RPT-UPDATE 2-Cape names new CEO to tackle Algeria troubles

* Oatley to take over as CEO effective June 29

* Appointment comes less than a week after profit warning

* Interim CEO Brendan Connolly to be reappointed to board committees

* Shares rise 8 pct, among top percentage gainers on LSE

By Abhishek Takle

May 30 (Reuters) - Cape Plc named a new chief executive on Wednesday, filling a post that has been vacant since March, in a move that comes less than a week after a shock profit warning from the resources industry services provider.

The company said Joe Oatley, former CEO of British engineering company Hamworthy, will take over as CEO at the end of June, replacing Martin May, who stepped down unexpectedly earlier this year after six years at the helm.

Oatley joined Hamworthy -- another provider of equipment and services to the marine, oil and gas, and industrial sectors -- as CEO in 2007.

He led the company through the financial crisis until it was eventually bought by Finnish ship and power plant enginemaker Wartsila.

Investors welcomed the news of Oatley’s appointment, sending Cape’s shares up 8 percent to 249.24 pence at 0845 GMT and making them one of the top percentage gainers on the London Stock Exchange.

The stock had shed about 29 percent of its value since Cape issued the profit warning last week.

“... I think he’s the right guy, so I think it’s a very good catch for Cape to get somebody of Joe’s capability,” Investec Bank analyst Keith Morris said of Oatley.

Morris added that Oatley’s ability to reorganize businesses to maintain profitability was just the sort of skill Cape needed, given his track record of steering Hamworthy through the financial crisis when orders dried up.

“... When times were tough and Hamworthy went through periods in the cycle, certainly during the financial crisis ... he took early steps to restructure the Hamworthy business and cut costs and streamline the business to ensure that they maintained margins and profitability.”

News of Oatley’s appointment comes two months after the company stunned investors and analysts by announcing May’s departure soon after Cape said the timing of the work releases on a key project had been slower than anticipated.

Just last week the company said it would take a charge for losses on that project in Algeria -- one of its two largest contracts -- that will hit profit for the year.

“It’s not the easiest time to come into the company, but management were quite reassuring that it was just specific issues in Algeria,” Northland Capital Partners analyst Andy Hanson said.

“He is generally very well respected, and Hamworthy was a very well-respected business ... so I do think it is a good appointment.”

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