Military spending slump hits Hunting

Click to follow
HARD TIMES in the defence and aviation industries depressed earnings at Hunting, whose shares fell 4p to 154p.

The company announced a pounds 2.1m fall in pre-tax profits to pounds 13.5m for the six months to 30 June. The slowdown in aviation and defence was somewhat ameliorated by a better result in the oil and technology division.

Ken Miller, chief executive, said that activity in the defence division had increased, and he expected a better outcome for the full year. But he said there were still question marks over whether the work was going to keep flowing to expand this side of the business. He appealed to the Government to make it clearer to defence contractors which projects would go ahead, so that they could invest in the necessary research and development.

Mr Miller said that Gibson Petroleum, its principal Canadian operation, benefited from higher pipeline volumes. The company said it expected further growth from Gibson despite the depressed state of the Canadian oil industry.

Pre-interest profits overall in the oil and technology division showed a pounds 900,000 rise to pounds 7.1m, despite a slowdown in North Sea activity.

The aviation division has been restructured and renamed. Business suffered from the cancellation of a large BP survey contract, and from fewer aircraft coming on stream for fitting out.

Mr Miller said Hunting had taken action to control costs, and about 400 jobs have been lost from a workforce of approximately 7,000.

Gearing rose 10 points to 68 per cent, because of an unusually high level of capital spending in recent years. Mr Miller said: 'The gearing figure may even be slightly higher at the year-end, but will then start to fall as our capital expenditure drops considerably next year.'

He predicted that profit levels for the full year would be at about the same level as last year, but warned that the economic climate made trading very difficult. 'I think it's going to remain very tough, and in such a climate the only sure way of getting growth is driving costs down.'

Earnings per share were 8.2p (9.1p) and the interim dividend is maintained at 4p.