Despite a drop in sales, interim profitablility at General Electric Co Plc has risen in line with analysts expectations. This was attributed to cost-cutting, better use of resources, and heavy investment to improve competiveness at GEC’s three principal operations, GEC-Marconi, GEC Alsthom and GEC Plessey Telecommunications. Performance elsewhere was mixed, but similar reorganisation is being carried out where necesssary. Pre-tax profits rose 2.9% to UKP356m, on turnover that fell 5.1% to UKP4,262m. Net cash balances increased UKP265m to UKP1,066m, while the level of outstanding orders grew 10.8% to UKP11,926m. GEC-Marconi, which specialises in electronic systems, saw sales decline by UKP25,000 to UKP1,219m. However, pre-tax profits improved by UKP1m to UKP87m despite high expenditure on research and development and reorganisation costs. Outstanding orders were up 7% on this time last year at UKP4,918m, and the subsidiary won several major orders in both the defence and civil markets. These include development work on defensive aids systems for the European fighter aircraft, and a production order for an interactive in-flight entertainment system for United Airlines. GEC Alsthom, which supplies power systems, increased both sales and profits. Pre-tax profits rose UKP12m to UKP77m, while revenues increased 14.8% to UKP1,445m. The number of outstanding orders were at ‘record’ level, with demand for gas-fired combined cycle power plants and coal-fired stations still strong. GEC Plessey Telecommunications, the group’s telecommunications division, experienced a 15.6% drop in sales to UKP491m, but profits increased by a marginal UKP1m to UKP61m.
Public Telepoint systems, using GPT’s CT2 technology, were installed in the UK and Hong Kong, while payphones, iSDX systems and submarine cable products sold well in Saudi Arabia, Venezuela, China and Iceland. Medical equipment supplier, Picker International, made ‘important’ progress, turning in record sales and profits. In local currency terms, these increased by 6% and 17% respectively. Profitability at GEC Plessey Semiconductors was hit by restructuring costs, compounded by a UKP23m drop in revenues to UKP138m. The division is currently expanding its sales to the Far East. Turnover at the office equipment and printing division fell UKP16m to 3147m, while profits were flat at UKP15m. Nonetheless, Videojet reportedly made record revenues and profits in local currency. Sales of industrial coding equipment were up 17%, and the company also introduced new bar code, case coder and printer products. AB Dick returned to profitability after last year’s losses. The consumer goods, electronic metrology, and industrial apparatus divisions were all affected by poor trading conditions; sales and profitability fell in each. GEC still generates the majority of its profits in the UK and continental Europe. The Americas, Australasia, Asia and Africa all saw profitability fall, while Africa and continental Europe were the only regions to experience a growth in sales. So, chairman Lord Prior is optimistic that the devaluation of sterling together with an improvement in the cover and conditions offered by the Export Credits Guarantee Department will improve the group’s competiveness internationally. The cuts in interest rates and the government’s proposals to finance capital projects privately, he says should provide an impetus for growth in some areas, and also create new opportunities.
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