Plessey Co Plc’s third quarter figures to December 26 have come in a little way below the expectations of the City with pre-tax profits up 8% on the same period last year – at UKP45.1m – on sales down 4% at UKP337.9m. Nevertheless, these results are seen as healthy enough by investors and although some analysts have dropped their full year forecasts for pre-tax profits to UKP200m and below, others remain optimistic and are hoping for up to UKP215m. For the nine month period, group operating profits increased by 12.4% to UKP119.9m and turnover rose by 1.7% to UKP1,024.9m. Plessey has already warned that its profits will be more evenly spread over the four quarters so the current fourth quarter should produce pre-tax profits below those of the corresponding period last year. Some analysts believe that profits for the fourth quarter, and so the whole year, will be down for other reasons: namely that Plessey’s fourth quarter results last year were surprisingly strong in comparison with the rest of the year, buoyed by performance at the Electronics Systems and Telecommunications divisions – and the need to pull out all the stops and throw in everything including the kitchen sink to fight off the extremely unwelcome bid from GEC. Telecommunications was strong because of substantial deliveries of System X in the UK and reduced losses at Stromberg Carlson in the US. This year, System X deliveries are likely to be weighted less towards the second half although Stromberg Carlson has been profitable all year. Electronics Systems profits were up 23.8% to UKP33.3m this time around and Telecommunications saw sales for the nine months rise 5.8% to UKP494.3m, with profits up 40% to UKP57.8m. On the current share price of 209p, Plessey is traded on a prospective price-earnings multiple of 13 times, still at a 15% discount to the sector, but doubts over the outcome for the full year to March 31 seem to have some foundation – especially in light of the special circumstances that coloured the figures reported last time around.The full figures are in Company Results, p5.
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