Aerospace cuts payout by 68%

AEROSPACE Engineering cut its dividend by 68 per cent, from 3.12p to 1p, after plunging to a pre-tax loss of pounds 230,000 against profits of pounds 2m. The losses were less severe than the City feared, however, and the shares doubled in value to 10p by the end of the day.

At the half-way stage, Aerospace, which manufactures components for the aerospace, electronics and general engineering industries, had pre-tax losses of pounds 271,000.

John Davis, chairman, said the second-half improvement came mostly from cost-cutting and reorganisation rather than an upturn in orders.

The group incurred extraordinary costs of pounds 1.28m in the year ended 30 April after selling its loss-making John Curran subsidiary and civil engineering hydraulic systems business. It is to concentrate on aerospace and electronics.

A further exceptional cost of pounds 981,000 came through rationalisation. The workforce has been cut by nearly 25 per cent this year and Aerospace has amalgamated its remaining businesses into one company to save operating costs.

But Mr Davis said the company, whose shares stood at 47p last October, made pounds 862,000 in profit before tax and exceptional items on continuing activities. Group borrowings were down by pounds 1.9m.

'Clearly we have been fighting a battle which we are on the way to sorting out. We have taken action by selling loss-making subsidiaries and amalgamating the rest.

'I think the fall in the share price has been through a combination of factors. Small companies have not been market favourites and aerospace has not been a favoured sector.'

There was a loss per share of 0.39p against earnings of 4.38p. Group turnover fell 22 per cent to pounds 28.8m, although turnover on continuing activities was down 14 per cent.

The Rolls-Royce joint venture company, Cooper Rolls, has won a dollars 140m (pounds 71m) Indian order to supply gas turbines for offshore oil and gas platforms. The value of the contract to Rolls is dollars 50m.