TOM GILL / LONDON
UK-based company cuts 1,450 more jobs, but sees potential for growth in actuation, avionics and components
UK-based Smiths Group is seeking further acquisitions to maintain its position as a first-tier aerospace supplier. The move comes despite its announcement last week of a further 1,450 job cuts and plant closures on the back of an 11% drop in operating profit for the first six months of the year.
There are "hundreds" of potential acquisitions in the actuation, components and avionics sector, says finance director Alan Thomson. Opportunities could arise if BAE Systems and Boeing spin off activities, while Smiths is also "interested" in certain aerospace businesses of TRW, which is fighting off a take-over bid from Northrop Grumman, he adds.
Smiths has at least £1 billion ($1.4 billion) to spend on acquisitions, while a further £1 billion could be generated from the sale of its industrial and seals divisions.
Meanwhile, Smiths will axe 1,450 more jobs in the six months to 31 July, after shedding 1,600 in the second half of 2001 to cope with the downturn in its civil business since 11 September. Smiths' headcount has dropped by 4,000 to 34,000 since its merger with TI Group in late 2000. Some 1,200 of the new cuts will be in the UK, while two aerospace plants in Philadelphia and San Diego will close.
Smiths' operating profit for the six months to 31 January dropped 11% to £201 million, from £226 million a year ago. Pre-tax profit fell 13% to £174 million on a 3% slide in sales to just under £1.5 billion. Its aerospace unit expanded sales from £596 million to £639 million, but operating profit slipped from £84 million to £80 million as higher turnover from lower margin defence activities offset weaker turnover from its civil aerospace activities. Civil original equipment and aftermarket sales "held up better than expected", says Smiths, but "the reduction in aircraft production is only now starting to affect sales of original equipment". Referring to airlines' improved traffic figures, chief executive Keith Butler-Wheelhouse says: "The bottom seems to be in sight."
Source: Flight International
