Fairey gains boost from defence activities

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(First Edition)

FAIREY, the electronics and engineering group, has been helped to a 26per cent increase in profits thanks to by a strongly improved performance from its defence-related business, writes Robert Cole.

The Defence activities, where Fairey supplies hydraulic and electric-activating mechanisms for planes aircraft including the Tornado, increased profits by 53 per cent to pounds 2m.

However, John Poulter, chief executive, said that the advance in defence profits was achieved without much assistance from the market place. He said the improvement came as Fairey benefited from a radical reorganisation programme. In the last past three years workforce numbers have declined from 600 to 300 and three manufacturing locations at in Bristol were merged into one.

Turnover from defence increased by 5 per cent to 11.9m. Profit margins in the division widened from 12 per cent to 17 per cent.

However, the defence side remains a small part of Fairey's business. Profits from electronics, where the company makes circuit boards and insulators for power transmission kit, advanced to pounds 8.8m from pounds 7.2m. Margins were maintained at 18 per cent.

Fairey's third division which makes industrial filters produced a 14 per cent increase in profits to pounds 1.8m.

Pre-tax profits for the six months to 2 July were pounds 12.9m compared to against pounds 10.2m. Earnings per share rose to 11.2p from 9.2p and the dividend was lifted rises 18 per cent to 2.25p.

Analysts estimate that Fairey will make full-year profits of about pounds 25m. Michael Blogg, of the stockbroker Charterhouse Tilney, yesterday raised his forecast from pounds 24.3m to pounds 25.3m and believes earnings will be 22.1p.

Fairey was floated off from the media group Pearson in 1987 and during the past five years has outperformed the market average by 250 per cent. The positive trend continued Yesterday with the stock closing closed 16p higher at 399p. The prospective price earnings p/e ratio is 18 times.