Lucas announces first disposal after review

PLANS to refocus Lucas Industries on its core automotive and aerospace operations got under way yesterday when the new chief executive, George Simpson, announced the first disposal.

Lucas Management Systems, an 800-employee software business at Slough, is being sold, and a consultancy, Lucas Engineering & Systems, which employs 400 near Birmingham, is also expected to go up for sale.

Further news of Mr Simpson's strategic review is likely to be announced when Lucas unveils its full-year figures on Monday. Analysts have forecast profits of up to pounds 80m, but these could be wiped out by write-offs of between pounds 50m and pounds 100m.

'This should clear the decks and help Lucas get back to basics,' an analyst said. 'We want to see an improvement in margins and better penetration of high-growth countries in the Pacific region.'

It is believed that Lucas's electrical systems division, which comprises such businesses as batteries, ignitions and tacographs, will also be put on the market. Mr Simpson may expand the range of automotive components.

Lucas said Mr Simpson's review was driven more by a desire to concentrate on core operations than to raise money. Nevertheless, the sale of Management Systems should raise about pounds 45m and Lucas Engineering about pounds 25m.

Mr Simpson joined Lucas from Rover Group this year and until now had given little indication of his plans for the company. Monday's results meeting will be the first opportunity for analysts to talk to him in depth about his intentions.

Of key interest will be his plans for the aerospace division, which has been undergoing rationalisation for about two years, especially in the US.

Factories are almost certain to be closed in the US, as well as the UK and Europe, with a substantial loss of jobs among the group's 44,000-strong workforce.

Lucas's provisions are expected to cover fines imposed by US authorities for quality control breaches at two aerospace operations. Although the US military is now accepting components from Lucas again, the affair has damaged the company's reputation.