Bottom Line: Westland airborne

FAILING to deliver a single helicopter during the first half did not prevent Westland notching up a 23 per cent increase in pre-tax profits. Doing so was a tribute to determined cost-cutting and a focus on persuading existing customers to maintain and upgrade the thousand or so Westland helicopters already in the air.

At 8,500, staff numbers are getting on for 20 per cent below their peak. Stocks fell 6 per cent despite an 11 per cent increase in turnover and gearing has been held at an undemanding 17 per cent.

Westland is handling what might have been a sticky transition phase with aplomb. Its success means the stock market is prepared to look forward to 1996, when profits from the EH101 helicopter - a joint venture with Agusta of Italy - will start to flow. A tripling of the order book to pounds 2bn, including an early 110 of a hoped-for 750 EH101 sales, provided investors with a reassuring floor for future earnings.

That is beginning to be reflected in a share price that has almost doubled since last September, adding 14p yesterday to close at 187p as analysts were caught short by better-than-expected figures. The market is beginning to believe its claim that, even in a dwindling defence market, the trend towards rapid response forces will boost demand for versatile helicopters.

That may be true, but on the basis of flat earnings this year (the tax charge is rising) the shares are beginning to look fully priced on a p/e of 17 - not least because at current levels the 22 per cent shareholder GKN is likely to feel increasingly inclined to take profits on its stake. High enough.