SMITHS INDUSTRIES believes that it may have hit the bottom of the aerospace downturn after reporting steady sales and improved profits for the first half of its financial year.
The Smiths aerospace group turned in sales of £172 million for its first half to the end of January. That was almost unchanged in real terms after accounting for currency fluctuations, says aerospace chairman Norman Barber. Pre-tax profits were by up 17%, to just over £16 million.
"We hope that this is the bottom of the trough. I would be disappointed if we don't start to see growth before the end of next year," says Barber, adding that this will be dependent on recovery in airline markets.
Smiths should receive a boost as payments start to flow through from the supply of power-management systems for the Boeing 777 when deliveries of the aircraft begin in June. Smiths expects 19 shipments this year, building up to 60 annually in 1997.
Deliveries of flight-management systems for the Boeing 737 should be fairly constant as the older-generation aircraft are phased out in favour of the new generation, for which Smiths will provide an upgraded system. Barber points out that Smiths has helped to lead in the drive to cut costs and lead times - Boeing has set suppliers the target of a 25-30% reduction. "I can see how we can achieve that without reducing our margins," he says.
Smiths is also due to benefit from its position on key military programmes. Deliveries of the British Aerospace Hawk and Panavia Tornado, as well as a steady stream of McDonnell Douglas F-18C/Ds, are already having an impact, while Barber points to growing business from the company's position on key future programmes such as the F-18E/F or the Eurofighter. Military markets account for 60% of Smiths' aerospace sales.
Source: Flight International