SMITHS INDUSTRIES is looking for opportunities to expand its aerospace division, as the business begins to re-emerge from recession with stronger profits and cash.
The growing confidence comes, as the aerospace unit turned in another solid performance, over the group's 1994/5 financial year to the end of September. Profits edged up to £40 million on sales, which held relatively steady at £374 million.
The main focus in aerospace over the past five years has been on driving down costs, with the workforce nearly halved, to 4,750. Meanwhile, the Smiths Industries group has been investing heavily in building up industrial and medical systems divisions, but now signals that it will look at reinvestment in aerospace as margins return.
Talks are going on with several manufacturers over possible tie-ups, but aerospace chairman Norman Barber says that it is not yet clear what opportunities may emerge as the market turns up.
Barber confirms that the division's profits should begin to take off as volumes start to grow. He points out that profits have been maintained throughout the recession, despite carrying the costs of rationalisation and key new product developments.
The division is already generating a strong level of cash, he says, adding that the improvement should continue as work on programmes such as the Boeing 777 begin to generate returns.
He admits that 777 production is running slower than expected, but should reach the 60 deliveries-a-year target in 1998. Production of Boeing 737s, for which Smiths provides the flight-management system, is also expected to remain muted over the next couple of years as the programme switches to the new-generation -6/7/800 family.
Defence programmes, including the McDonnell Douglas F-18 and AH-64D Apache, as well as British Aerospace Hawk and Tornado updates, are also due in the "next few months", says Barber.
Source: Flight International
