New Suncor CEO Kruger focused on cost-cutting, will 'play to win'
CALGARY — The new top boss at Suncor Energy Inc. says he will be sharply focused on cost-cutting as he embarks on the task of improving performance at the oilsands giant.
Rich Kruger, who took over as Suncor's new CEO on April 3, pledged Tuesday that the company will become a "simpler and more focused organization" under his leadership.
On a conference call with analysts to discuss the company's first-quarter financial results, he promised to be candid, transparent, and operate with a "sense of urgency" as he seeks to fulfil his mandate to make changes at the Calgary-based company.
"I consider myself to be reasonably decisive, and very competitive," Kruger said. "I play to win."
A familiar face in the Canadian oilpatch, Kruger led Imperial Oil Ltd. as president and CEO from 2013 until his retirement in 2019. His time at the helm of Imperial Oil was the culmination of his 39-year career with parent company ExxonMobil Corp.
Kruger's appointment to the top job at Suncor — replacing interim CEO Kris Smith, who stepped in to fill the role after Mark Little resigned in July 2022 — came after months of investor pressure in the wake of a spate of workplace deaths and safety incidents, production challenges, and a lagging share price.
Kruger said Tuesday that in his first five weeks on the job, he has visited half of the company's major facilities and met with workers and management.
While he said Suncor is a proud company with excellent people and high-quality assets, he believes it has untapped potential.
"I see a gap between our current performance and what I would consider best-in-class in many, many areas," he said.
He also talked up the importance of "organizational efficiency" and suggested that there are ways to trim the company and reduce costs.
"I think we can eliminate work. I think we can do away with work that doesn't add value," he said, adding that all employees need to consider how their role helps to generate revenue for Suncor.
"I very much believe in making money. We are in the business to make money and as much of it as possible, and everybody starting with me needs to see how they do that," Kruger said.
In an interview later Tuesday, Kruger said he hasn't been with the company long enough to know whether its current workforce is the right size or not. But he said he isn't going in with any arbitrary staffing number or target in mind, adding that instead he sees his rule as "clearing the pathway for employees to perform at the top of their ability."
"I want to be sure that everything they're doing adds value to the bottom line," he said. "So I will look hard and long at the work people do."
Kruger's ability to turn around the flagging fortunes of one Canada's largest energy companies will be heavily scrutinized by many — including U.S.-based activist investor Elliott Investment Management, which had been pushing for change at the top of Suncor.
Two of the board directors serving on the CEO search committee that recruited Kruger were named to Suncor's board last summer, as part of a deal the company struck to appease Elliott Investment Management.
Elliott publicly expressed frustration last spring at what it called a recent decline in performance at the energy producer.
The activist investor also criticized Suncor for its safety record. At least 12 workers have died at the company's oilsands operations in northern Alberta since 2014, and former CEO Little resigned just one day after the most recent fatality.
In a note to clients Tuesday, RBC Capital Markets analyst Greg Pardy said with a recharged leadership team under the direction of Kruger, Suncor is "poised to re-establish operating and financial momentum in the months to come."
"We like what we heard on the call, and look forward to improved results in the coming quarters," Pardy wrote.
Interim CEO Smith will assume the role of chief financial officer and executive vice-president of corporate development later Tuesday after Suncor's annual general meeting.
Alister Cowan, the current CFO, is set to retire at the end of the year.
Suncor, which reported its first-quarter earnings after the close of markets on Monday, said it earned $2.05 billion in the first quarter of 2023, down from $2.95 billion in the same quarter of 2022.
The Calgary-based energy giant's net earnings included a $302-million gain on the sale of the company's wind and solar assets, which the company recently sold to Canadian Utilities Ltd. for $730 million.
On an adjusted basis, Suncor says its operating earnings for the first quarter were $1.81 billion, or $1.36 per common share, a 34-per-cent decrease year-over-year.
The company says the decrease in earnings was primarily due to decreased crude oil realizations, increased operating expenses, lower upstream production and refinery throughput and weakening crude oil prices.
This report by The Canadian Press was first published May 9, 2023.
Companies in this story: (TSX:SU)
Amanda Stephenson, The Canadian Press