Export prospects boosted for GKN
Friday 10 March 1995
GKN believes the Government's decision to award a £500m helicopter order to its Westland division should earn it milllions from export markets around the world.
Analysts, who were yesterday revising their GKN profit forecasts, estimated that Westland could sell 700 of its EH101 helicopters over 30 years.
Despite objections from the RAF, which favoured the rival Chinook helicopter made by Boeing, the Government is ordering 22 of the Westland helicopters. Eight Chinooks have been ordered.
"Our fear was that the EH101 would be difficult to sell if our own government rejected it,'' a spokesman said.
GKN, which yesterday reported a doubling of pre-tax profits to £200m, saw only an average performance from Westland, which it bought last March.
Westland made operating profits of £19m, in line with expectations, having suffered from order cancellations in a weak civil aerospace market.
GKN said revenue from the EH101 order should begin to feed into Westland this year, although the first profits could be a couple of years away.
Westland is expected to tender for a helicopter order from the Italian government, and the US Navy is reviewing its requirements. The most lucrative markets, however, are in the Middle and Far East. Yesterday's deal will give GKN a boost for a forthcoming defence equipment exhibition in Kuwait.
One analyst estimated that the EH101 could achieve additional sales of around £2bn in the medium term, plus valuable after-market maintenance contracts.
GKN yesterday reported a 61 per cent rise in operating profits to £122m in its automotive and engineered products division. The company saw an upturn in most of its main automotive markets, particularly in Continental Europe. British and North American automotive markets remained reasonably strong.
One analyst raised his forecast for 1995 pre-tax profits to £274m from £255m due to strong demand from the US car market.
Turnover rose 17 per cent to £3.09bn. The final dividend of 13.5p makes 21.5p for the year, up 1p. Shares, up 18p at one stage, closed 14p up at 579p.
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