Hampson profits nose dive as aerospace remains tough

BLACK Country aerospace group Hampson Industries has reported a decline in full year revenue and adjusted profit, underlining the difficult trading conditions in the firm’s key markets during the past 18 months.

The company said that with lower revenue, adjusted pre-tax profit to March 31 was £24.9m, a drop of 34% on last year’s £37.6m. Revenue came in at £178.3m, a decline of 31% on the £256.6m recorded in 2009.

Statutory results were more encouraging, with a pre-tax profit of £22.9m, which compares with a loss of £15.4m the year before.

Hampson said the results had been impacted by delays on major aerospace programmes together with reduced revenues in its key aerospace components and structures operations. The company’s automotive operations were also affected by the general decline in the industry.

It is more optimistic for the future, with orders up 7% since last September, at £140m. It said its tooling quotation pipeline was also looking strong, at £255m.

However, it has warned that the rate of recovery during the first two months of the new year has been slower than expected and as a result, was staying cautious about full year estimates.

The year also saw a successful capital raising of £55m, net of expenses, which is being used to strengthen the company’s balance sheet and improve its financial flexibility. Hampson said this would enable it to take advantage of opportunities in core markets as they arose.

The tough conditions forced the company to make cost savings where it could and £24m was generated with the disposal of its legacy machining business in August last year.
 
The company said with improvements to its cash generation it was now more focused on operational improvements.

Chris Geoghegan, group chairman, said: “We have continued to win new work and have delivered a creditable set of results despite the many challenges faced during the year. Our orderbook and quotation pipeline have both increased since the year end which we see as a positive indicator.”

However, he warned the overall rate of recovery during the first two months of the current year had been slower than expected.

“For this reason it is appropriate to continue to remain cautious about our out-turn expectation for 2010/11 and in  particular our results for the six months to September 2010, whilst we assess the rate at which orders are secured that are available for near term production.
 
“Over the medium to longer term, the board believes that with the combined strength of our business portfolio, the management actions in hand, and the opportunities emerging in our markets, Hampson is well positioned to return to sustainable growth,” he added.

He said the previous year had as expected, been a difficult one for the industry in general. He there had also been considerable delays in development programmes as the aerospace sector retrenched due to falling demand.

“Both of these factors created uncertainty in our core market sector and caused our aerospace customers to defer spending on large tooling programmes, leading to a significant impact on our revenue and results for the year.  
 
“In order to confront these major challenges head on, we have successfully cut costs and implemented a range of actions across the group to protect and improve our businesses and to focus on cash generation as a key priority,” he said.  
 
The firm said it had also made every effort to improve the performance in its non-core automotive business and good progress was being achieved in this area.

“Despite the many challenges faced during the year, we have continued to win new work, have delivered a creditable set of results and we end the year with a stronger balance sheet and confidence in the medium to long term future of the group,” said Mr Geoghegan.