30th Aug 2005 15:46
Hampson Industries PLC30 August 2005 Hampson Industries PLC Annual General Meeting- Chairman's Statement At the Annual General Meeting of Hampson Industries PLC, which took place today,Chairman Tony Gilroy made the following statement in relation to the outlook forthe Group's key markets and current trading: "Our aerospace businesses have won substantial new contracts over the lasteighteen months on new airframe and engine programmes. Several of these provideHampson with exclusive supply status over the life of the programmes concerned.This has been a deliberate strategy of the group to benefit from higher growthand longer revenue cycles. These programmes naturally require complex initialengineering development work and logistics planning as well as the commissioningof new machine tools before the benefits can start to be realised. This activity has been particularly intensive in the Machining division duringthe first four months of the year and has resulted in the company incurringadditional expensed cost as well as increased investment in working capital.Much of the development should be largely concluded by the third quarter, and weexpect the improvement in results to be evident in the second half of thisfinancial year. A continuing deferral of military spares and repairs ordering by the UK MoD hascontinued to hold back performance at our Aerospace Fabrications & Assembliesdivision during the first quarter. The second half will see a more profitablemix of orders delivered, and a resulting stronger profit performance isanticipated. Development activity on the Eclipse programme has continued andnewly acquired leasehold facilities in Texas, USA and Wigan, UK are about tocommence fit-out. Meanwhile, our customer, Eclipse Aviation Corporationcontinues to achieve key milestones in moving towards aircraft certification in2006. I am also delighted to report that Texstars, which we acquired in December 2004,continues to perform strongly, with profits slightly ahead of our expectationsand prospects for the longer term remaining very encouraging. The anticipated benefit from the rationalisation of the Precision Automotivedivision during the second half of last year continues to be realised, withsales and profits in the current year to date ahead of the equivalent levels inthe prior year. We expect margins to show continued improvement during thesecond half as the result of revised working practices and increased capacity.Work on the construction phase of Hampson Maini Engineering's new facility inBangalore will commence shortly and our teams continue to plan for commencementof trading towards the end of the current financial year. Within Automotive, strong demand for turbo chargers continues in line withgrowing demand for leaner-burning combustion engines and the increasing usage ofdiesel engines by passenger car and light vehicles. New tax incentives expectedto be made available from January 2006 are likely to lead to increasingpenetration of "clean diesel" engines in the US light vehicle market which couldresult in a significant additional growth stimulus to our turbo charger businessover the medium to longer term. Against this backdrop of opportunities the first four months of the currentfinancial year have marked a period of extensive revenue and capital investmentby Hampson as we continue prepare the group to fulfil the many new contractssecured over the previous eighteen months and to commission new, state-of-theart capacity. Sales in the Precision Industrial division have been lower than at thecomparable stage of the prior year as a result of continuing subdued demand fromour glass container-manufacturing customers. This has resulted in a smalltrading loss for the division, compared to a profit in the equivalent period ofthe previous year. Actions have already been taken to reduce the UK cost baseand this, together with further contracted deliveries of practice ordnance,underpins our confidence that the division will return to modest levels ofprofitability in the second half. The outlook for our core aerospace and precision automotive markets remainsencouraging. Commercial aircraft production rates continue to rise and furthergrowth is widely forecast over the medium term. The order intake for new largecommercial aircraft for the three-month period to 30 June 2005 was significantlygreater than in the entire second half of the previous calendar year. Despiteprogressively increasing deliveries of aircraft to their airline customers, thecombined order backlog for large commercial jets for Airbus and Boeing has grownby over 20% over the 12 months to 30 June 2005. The overall performance of the Group for the four-month period to date has beenin line with expectations. We expect profitability in the second half to begreater than the first half and in line with market expectations for the year asa whole." Tony GilroyChairman This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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