Rice vouches for aerospace and diesels

Victor Rice, LucasVarity’s chief executive, has dismissed city speculation that its diesel engine business VarityPerkins and aerospace division will be sold as part of the strategic refocusing of the Anglo-American components and engineering group. `Neither of the businesses are for sale,’ he told analysts at a presentation of the first full-year results since the merger […]

Victor Rice, LucasVarity’s chief executive, has dismissed city speculation that its diesel engine business VarityPerkins and aerospace division will be sold as part of the strategic refocusing of the Anglo-American components and engineering group.

`Neither of the businesses are for sale,’ he told analysts at a presentation of the first full-year results since the merger of Lucas Industries and Varity Corporation last year.

Group operating profits rose 5% over the 12 months to 31 January 1997 from £319m to £336m. Pre-tax profits were £282m from total turnover of £4.6bn.

But speculation continues over the long-term fate of the two divisions. Operating margins at VarityPerkins rose from 8.6% to 9% with operating profits up 7.3% to £59m. Aerospace achieved a 9% rise in operating profits to £49m, with margins increasing from 9.5% to 9.6%.

John Lawson, analyst with Salomon Brothers, said the group’s current love affair with both divisions could be short-lived.

`Two or three years from now Perkins might go should LucasVarity decide to concentrate solely on being a supplier of automotive systems, while aerospace is an entirely different business, with no reason to be wedded to the group,’ he said.