Cost reductions of around UKP60m were key to Lucas Industries Plc’s year end results as the company reported operating profit, up 46.7% to UKP87m. Employee numbers have fallen by 4860 this year which, says the company represents a cumulative 20% reduction since July 1990. The group’s actual income, net of currency movements rose by 2%, not bad given the parlous state of its core aerospace and automotive businesses. Profits of UKP7.7m and cash proceeds of UKP56m were collected as Lucas divested itself of a number of non-core business units. The the company is still without a head and the board says that it expects to unveil the identity of the new chief executive at, or before next month’s annual meeting. Most of the group’s straight computing activities are tied up in the Applied Technology business, which includes software arm Lucas Management Systems (nee Metier) as well as the electronics; consultancy; sensing and control; and testing operations. At constant exchange rates, sales in this arm fell by 3%, although the raw figure indicates growth to UKP319m from UKP287m. Once again, this is not too bad, given that the sale of Lucas Fluid Power hit Applied Technologies’ sales by UKP32m. Indeed the business has seen its profits improve to UKP10.9m from UKP100,000 as cost-cutting and restructuring began to pay off. Applied Technology did post a loss of UKP200,000 in continental Europe, slightly worse than last year when it neither made nor lost money. However,it remains unique among Lucas’ divisions in producing a profit – UKP4.5m – in the US, up from UKP1.9m last year. An unchanged final dividend of 4.9 pence a share is being sweetened by a 50% better scrip issue alternative worth 7.35 pence a share to save the firm the Advance Corporation Tax due on cash dividends. The company has taken advantage of the UK’s lower exchange rates to negotiate extra long-term borrowing and as a result of this and a reduction in working capital, cash balances now stand at UKP437m and gearing stands at 45%, a touch higher than last year’s 44.2%. Reuter reports that Lucas said it was moving ahead on its UKP100m sell-off of non core businesses. This year’s UKP56m takes the running total of proceeds to UKP75m.
