MS looking for its best defence in second half

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MS International said its defence arm should see a “much stronger” second half following a fall in first half profits.

The Doncaster-based company, which makes guns for naval destroyer ships, said that while time delays on orders are frustrating, it has a good pipeline of work ahead.

Chairman Michael Bell said: “Defence is now looking forward with confidence to a much stronger second half year.

“The majority of orders are already in hand to achieve the expected full year revenue and there are a number of very interesting new business prospects emerging from around the world.

“We recognise however that everything just seems to take a little longer on the prospect to order timeline than previously. It may be frustrating but we are confident in our abilities to maximise the opportunities.”

At its interim results yesterday, MSI said the group is trading in line with expectations.

“A distinct second half revenue bias will occur this year owing to the phasing of customer dictated delivery schedules at our largest subsidiary, defence,” said Mr Bell.

Pre-tax profits in the six months to October 27 came in at £2.6m, down 35 per cent on last year’s record £4.1m profit.

Revenue slipped from £27.9m to £26.3m.

Mr Bell said the balance sheet is “very strong” with net cash and short-term deposits £10.8m, up from £10m in April.

He said that the phasing of defence orders was the major factor affecting the results. The group was hit by a reduction of regular orders, which coincided with delays in major contracts as Governments from around the world cut their defence budgets.

MSI’s defence business makes small and medium-calibre guns for naval vessels. It is a major supplier of naval equipment to the UK Royal Navy and provided the United States Navy with 30mm naval gun systems. It supplies 40 other navies around the world.

It specialises in leading edge gunnery weapon systems through to navigational plotting tables, tactical shelters and underwater systems.

In addition to defence, MSI has two other divisions – forgings and petrol station superstructures.

MSI’s forgings arm makes components used in a wide range of industries including forklift trucks.

Mr Bell said that forgings markets around the globe have been mixed, although the majority are less buoyant than before due to the economic downturn and exchange rate fluctuations.

In contrast, he said petrol station superstructures more than held their own in European markets, increasing market share and raising both revenue and profitability.

“Most crucially, order intake in the period was some 80 per cent higher at the end of October and currently the value of orders on hand is some 25 per cent higher,” said Mr Bell.

The division designs and makes forecourt canopies in both the UK and Poland, working for firms including Tesco, Shell, BP and Sainsbury’s.

Looking ahead, he said he had “a good measure of confidence” about the full year outlook, subject to there being no further deterioration in the global economy.

As a result, MSI is maintaining its interim dividend at 1.5p, payable on December 21.

MSI has been involved in the design and manufacture of defence equipment in the UK for more than 100 years.

The company expanded rapidly through the early 20th century and was manufacturing defence equipment before the First World War.

In the 1930s it supplied electro mechanical computers for both surface ship Large Gun Fire Control and Submarine Torpedo Fire Control systems.

With the advent of digital control technologies in the 1970s, the company switched to designing sophisticated above water and underwater weapons and sensor platforms.

ros.snowdon@ypn.co.uk

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