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December 4, 1991

GEC TURNS IN ANOTHER “STEADY AS SHE GOES” PERFORMANCE WITH PRE-TAX PROFITS UP 1.2%

By CBR Staff Writer

No surprises for the City from GEC Plc at the interim stage, as pre-tax profits of UKP208m were reported on sales of UKP4,491m. GEC Plc says all 10 groups within its confines contributed to profits during the first half of 1991, with particularly strong performances put in by Telecommunications – which saw pre-tax profits rise 13% to UKP60m on revenues up slightly at UKP580m, Power Systems and Medical Equipment, and a measure of recovery in Electronic Components. In Electronic Systems, better known as GEC Marconi, GEC’s largest single activity, which incorporates Ferranti Defence Systems, pre-tax profits were down 18% at UKP81m on sales up 4% at UKP1,274m. GEC Marconi is ready to scoop up Ferranti’s missile business for UKP38m, partly as compensation for paying too much for Ferranti Defence (CI No 1,795). The deal is pending shareholder approval – shareholders are due to meet later this month. Just to get the price right this time, the UKP38m is subject to adjustment according to cash flow between April 1 and completion of the deal. No word on the suggestion that GEC might scrape up the other remains of the ever-shrinking Ferranti International Plc. GEC Ferranti was known still to be profitable in September (CI No 1,759), but GEC is loth to elaborate on the division’s current contribution to the Electronic Systems business. Nor is it known how much Ferranti cost the group in restructuring charges, following the 800 job cuts recently – associated costs are included somewhere in the results below. The most successful chunk of GEC’s business is the Anglo-French joint company, GEC-Alsthom, which increased its profits to UKP65m from UKP58m. The business has won several new orders for trains and power stations, while at the same time implementing a restructuring programme and cutting employment by 1,400. Office Equipment & Printing saw profits up 7% at UKP15m on sales up 2% at UKP163m. Overall, the UK made UKP145m on UKP1,665m, down from UKP156m on UKP1,703m, while the revenue contribution of continental Europe was up at UKP1,170m; the US up at UKP901m; Australia up at UKP162m; Asia up at UKP392m and Africa up at UKP84m. Product orders were maintained at the level of a year ago, at around UKP10,800m.

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