Yesterday’s first quarter results meeting may be the last from Plessey – the company is seriously considering abandoning its practice of reporting its financial statistics on a quarterly basis. Year on year quarterly comparisons are substantially distorted by the incidence of profit milestones of major contracts and the patterns of deliveries of System X, which […]
Yesterday’s first quarter results meeting may be the last from Plessey – the company is seriously considering abandoning its practice of reporting its financial statistics on a quarterly basis. Year on year quarterly comparisons are substantially distorted by the incidence of profit milestones of major contracts and the patterns of deliveries of System X, which accounts for some 40% of the group’s business, said Sir John Clark. As the company warned at the end-of-year results meeting in June, the first half of the current year is disappointing, but chairman Sir John, and managing director Sir James Blyth confirmed that the outlook for the year as a whole would be an improvement on last year. Plessey reported operating profit down 26.1% at UKP29.4m for the first quarter on turnover that fell by 11% to UKP300m. Telecommunications operating profits dropped 70% to UKP10.8m on turnover, which declined 19% to UKP133.4m, but the order book at the end of June showed an increase of 12.8% for the first quarter. Electronic systems profits at UKP8.7m were down 19.4% although again the order book shows an increase of 12.8%. Aerospace and engineering was flat and microelectronics and components profits were down a disastrous 245% at UKP1.1m. Plessey says this result was affected by the costs of an industrial dispute in the Wound Products plant in Italy, which is now settled. The company says that it has increased R&D investment this quarter by 7.8% to UKP22m, most of which has been absorbed into development of System X. System X is seen as a working central processing unit now, so that development is concentrated on enhancing software, developing applications specific software and peripheral products. As for threats about GEC undercutting Plessey on price per line, David Dey was dismissive. There is no price war going on between GEC and Plessey on System X. There is too much private venture investment on which GEC would be dependent to deliver to British Telecom. In addition to this, a lot of System X business gets placed outside the tranche system. Plessey has set up a joint marketing agreement with Italtel, whereby the Italian company will sell some of Plessey’s products, as yet undefined, into the Italian market and Plessey will sell a small PABX and a small keysystem in the UK. The market was relieved that the figures weren’t worse, and that the rumours of boardroom battles and the departure of Sir James Blyth proved groundless – and were the subject of some pawky chuckles among the principals at yesterday’s meeting, and the shares added sixpence to close the day at a still depressed 187p.