UNEXPECTEDLY HIGH development costs again left GEC's defence and electronics division showing flat profits over the first half of its financial year.
The division, most of which falls within GEC-Marconi, held pre-tax profits at £80 million ($120 million) for the six months to the end of September, while sales edged up slightly, to go above £1.2 billion.
GEC, which prides itself on tight financial controls, had surprised analysts earlier this year by making a provision of around £40 million to cover contract costs at the Marconi division.
The contracts were not named, but likely candidates are the Eurofighter 2000 radar, and the long delayed, Phoenix unmanned air vehicle.
GEC says, that "good technical progress" continues to be made on the contracts, but adds that the costs will be charged against profits, until "...the related commercial negotiations are complete".
During the half year, GEC gave its defence interests a boost with the acquisition of VSEL and a 50% interest in the Ferranti-Thomson Sonar Systems business. Together, the acquisitions cost around £740 million, but have made little dent on the group's £1.2 billion cash pile.
Speculation continues, about changes likely within the group once a successor is found, to GEC's founding chairman Lord Weinstock, who is due to step down by mid-1996.
In particular, interest focuses on what future GEC outlines for its £700 million avionics business, with industry insiders contemplating the possibility of a shake-up within the UK industry.
Source: Flight International
