Bowthorpe edges ahead

BOWTHORPE, the electronics group that produces 'black box' flight recorders, demonstrated its resilience to recession with a 5 per cent rise in pre-tax profits to pounds 22.4m for the six months to 30 June.

The interim dividend also rises 5 per cent to 1.79p on earnings per share up 10 per cent at 7.88p.

John Westhead, chief executive, said he was 'modestly pleased' with the figures and was confident that the growth would be maintained at the full year.

He saw very tentative signs of an upturn in the economy but said that was hedged 'by great caution and every caveat in the book'.

He admitted that profits at Penny & Giles, the company that makes the black boxes, were running below expectations. Bowthorpe bought Penny & Giles for pounds 30m in May, and has made 'significant cost reductions'.

The workforce of 900 has been reduced by 100, and the company has been focused on its core business. 'We have got out of a couple of businesses that did not really fit and merged a couple of others,' Dr Westhead said.

He denied that Bowthorpe had paid too much for Penny & Giles: 'It has not lived up to expectations in terms of profits in the short term but it has good products, excellent technology and good people. It also has synergy with our other recent acquisitions, B&D Instruments and Odessa.'

Operating profit in Britain rose to pounds 4.8m from pounds 3.9m, with just over half the growth coming from the Edgcumbe Instruments and Penny & Giles acquisitions.

Dr Westhead said Bowthorpe had performed well in Germany although demand in the economy as a whole was down. Operating profit from continental Europe increased by 5 per cent to pounds 9.1m.

In the US, operating profit rose 17 per cent to pounds 6.3m, and Dr Westhead said he expected a gain of about pounds 1m for the full year because of the weak pound. There was a pounds 500,000 fall to pounds 1.7m in operating profits from the rest of the world, ascribed to weak trading conditions in Japan.

Bowthorpe was proving resistant to the recession because 'we got into the business of controlling costs early', Dr Westhead said. 'We are constantly looking at how we can improve a little in every one of the companies in the group.'

Turnover across the group, which manufactures products for a wide range of niche markets, rose 12 per cent to pounds 125.6m.

Dr Westhead said that Bowthorpe was still interested in acquisitions. 'We are still able to invest in the future and are continuing to look at synergistic acquisitions.'