VT aims for $500m sales in surging US defence sector

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The Independent Online

VT, the support services and ship building group, is planning to quadruple the size of its US operations to capitalise on the huge growth in American defence spending.

The company, formerly known as Vosper Thornycroft, is aiming to grow US revenues from $130m (£78m) a year to $500m over the next five years to lessen its dependence on the UK, which currently accounts for about 70 per cent of turnover.

Paul Lester, VT's chief executive, said the expansion would probably involve buying at least one more American contractor. He said VT could afford to spend £50m on a "bolt-on acquisition".

Revenues from its US business, VT Griffin, which runs 30 naval, army and air force bases, rose by a third in the first six months of the year due to increased activity connected with the invasion and occupation of Iraq.

That helped VT to increase pre-tax profits by 11 per cent to £20m - meeting its pledge to achieve double-digit earnings growth. The order book grew to £2bn, of which almost £1.8bn is accounted for by support services - now 75 per cent of group business. VT is raising the interim dividend by 7 per cent to 2.57p.

Mr Lester said VT hoped to sign an agreement in the next two to three weeks to take a stake of 5 to 10 per cent in Air Tanker, one of two consortia bidding for a £13bn RAF refuelling contract.

The group is bidding for warship contracts worth up to £1.3bn from Greece, Oman and the Ministry of Defence to keep the 850 workers busy at its new Portsmouth yard. Work is starting late on a new batch of Type-45 destroyers because of technical difficulties.

VT expects the Portsmouth workforce to increase by up to 1,000 when it starts work on two aircraft carriers for the MoD, a programme in which it has a 20 per cent work share.