Plessey Co Plc chairman and chief executive Sir John Clark yesterday announced operating profits for the year to April 1 of UKP148.6m, a disappointing drop of 10.6%; pre-tax profit was boosted by investment income and share of profits of related companies but still fell 6.6% to $172.1m. Sir John commented, I think it would be fair to say – especially in taking account of the negative effects of currency – that this is a creditable result. The bad news was partly offset by record fourth quarter profits which rose 29.2% to $66.8m, while the company’s order book is in a very healthy condition standing at UKP1,739m – an increase of 27.6% in the year after several quarters of near stagnation. The company also took the opportunity to announce that it had acquired a further 14% of Rome-based communications and command and control specialists Elettronica SpA. Its additional investment will provide Elettronica with the equivalent of UKP38.2m capital and reserves and bring Plessey’s stake in the company up to 49%. Elettronica is established in both civil and defence markets in Italy and other European countries, giving Plessey another marketing outlet for its own range of civil and defence products. The announcement came at the end of a highly active year which saw an UKP84m investment in acquiring defence specialists Sippican in the US and Leigh Instruments in Canada. Plessey stressed that it is expanding its market base with less reliance on the two old reliables, the Ministry of Defence and British Telecom, which constituted less than 50% of sales compared with well over 50% in 1987. The most important event of the year was of course the launch of GEC Plessey Telecommunications, which began operations last month. A strong fourth quarter in telecommunications could not stop profit sliding 7% to UKP81.1m in the division. The company said the main factors were reduced deliveries of System X to British Telecom and increased pressure in business systems, though there was a strong performance from Stromberg Carlson in Florida, which received orders from BellSouth and Pacific Telesis. Now that telecommunications is effectively no longer a core Plessey business, the Electronics Systems division – mainly defence with a turnover of UKP463.6m, now constitutes 65% of total sales, with microelectronics and components accounting for 20%, and aerospace and engineering 15%. It is likely that the microelectronics and components division will shrink further following disappointing profits of UKP4.9m. The company has decided to sell Towcester, Northamptonshire based Plessey Microsystems Ltd which saw a small loss last year and has assets of UKP10m: it makes VMEbus boards, mainly using Motorola chips. Finally Sir John said he personally was looking forward to 1992 as he felt that both the French and the West German industries was featherbedded. He is also hopeful that gossip that tariffs, which could remain in place under the Treaty of Rome even after the open market in civil goods and services comes into play, will in fact also be removed.
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