Morson hit by defence cuts as profits slide

MORSON, the North West-based technical recruitment company, said today that it was suffering from the knock-on effects of the Government’s cutbacks on defence spending as first half operating profits fell 30%.

The Salford company supplies contractors to companies including BAE Systems – which yesterday announced 3,000 job cuts amid a slowdown in orders.

Gerry Mason, chairman of Morson, which is also active in the nuclear, power, rail and aerospace sectors, said: Gerry Mason, Non Executive Chairman, said: “As is well documented underlying market conditions during the year to date have remained poor, influenced by a lack of global capital expenditure and worldwide attempts to kick start investment activity.

“Despite this Morson produced a solid performance in line with our expectations.”

Despite the slump in profits, revenue in the six months to the end of June
rose 11% to £246.3m.

Morson said it had seen a “significant reduction in activity” caused by Government’s Strategic Defence Review.

This began to affect the business at the end of 2010 and resulted in a fall in revenue of around £15m from our contract to supply XPS/BAE Systems during the first half.

Commenting specifically on BAE Systems announcement on its latest round of cuts, Gerry Mason said: “We would comment that the sites at which much of this is to occur hold much reduced numbers of contractors already and emphasis seems to be on production, where we have less revenues, rather than maintenance areas.”

Looking ahead, he said the view was that the domestic economic environment “will remain uncertain with pressure on margins continuing for the foreseeable future affecting Morson’s trading”.

In response the company is seeking to broaden its offering by investing in niche and emerging areas, such as oil and gas, telecoms, professional services, overseas and IT.
 
“We believe that we are well positioned and have the experience and expertise required to maintain and grow our market share and that this positions the group well for improved performance in the coming years,” Mr Mason added.