Aviation slowdown pushes Hunting results lower: Oil interests are bright spot for defence contractor

SHARES in Hunting, the defence contractor, aircraft servicer and oil distribution company, fell by nearly 7 per cent yesterday on publication of disappointing interim results.

Hunting was held back by a reduced contribution from the aviation side. But for a lucrative contract to manage the Aldermaston air base, profits from defence would also have fallen.

The company suffered a further setback with British Aerospace's decision to cut production of its Jetstream aircraft in Prestwick, Ayrshire. Hunting makes interior fittings for the aircraft.

The bright spot was in oil. Hunting owns pipeline, trucks and terminals tied to Canadian oil fields. A 50 per cent increase in oil volumes fed a 27 per cent increase in Hunting's operating profits from the division.

Profits before tax for the six months to 30 June were pounds 17.4m, up from pounds 13.5m. However, the rise was flattered by a one-off profit of pounds 5.8m on the sale of a subsidiary. It sold brands including rust-resisting Hammerite and Waxoyl to Williams Holdings in February.

It was also hit by a pounds 2m charge incurred when restructuring part of its defence communication business.

Operating profits, measured before the one-offs, were also flattered by an inflated contribution from the Aldermaston contract. Hunting has only a 51 per cent share in the joint-venture company that handles the contract, and while all profits from it are included at the operating line Hunting has to make proportional payment to its partners.

Due to Ministry of Defence restrictions, Hunting said it could not disclose exact figures, but it said the effect was shown in the cost of settling minority interests, which climbed to pounds 2.5m from pounds 1.3m.

Stockbrokers' analysts revised their forecasts for full-year profits after yesterday's news. Paul Ruddle of NatWest Securities reduced his estimate from pounds 32m to pounds 26.6m.

Earnings per share for the first half rose to 8.3p from 7.1p but the dividend was held at 4p. The shares closed down 16p at 233p.

If Hunting holds the full-year payout the yield is 5.4 per cent.