Bottom Line: Vickers' problems

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INTERIM figures from Vickers, the engineer, disappointed the stock market yesterday. Its shares fell 7p to 188p on publication of results that nearly doubled.

Cost savings are coming through. But the stock market was disappointed because Vickers admitted difficulties in three of its four areas. Aerospace engineering is still on its back and likely to remain so for at least another 18 months.

Medical - where Vickers makes expensive capital items such as incubators - is suffering as buyers defer purchasing decisions. In Britain doubts about the future of the NHS are a perennial problem, and in the US buyers are worried about the impact of the Clinton healthcare reforms.

In automotive, sales of Rolls- Royce cars are picking up but reports of sluggish demand in the US dampened market optimism about the subsidiary's fortunes.

The downbeat message in these areas only emphasises the vital importance to Vickers of the order from the Government of 259 Challenger 2 tanks for the Army.