General Electric Co Plc’s half year figures bettered analysts’ predictions and suggest that it is shrugging off the past year’s sluggish performance. After last year’s dip in operating profits at the half year, GEC has reported operating profits up 13% but pre-tax profits still up only 5% to UKP378m; analysts’ consensus estimate had been UKP374.7m. But first thing yesterday, GEC shares fell 2.0 pence to 273 pence amid a broad market decline. Turnover rose 10% to UKP4,840m of which UKP854m was exports. Although this was a rise of 25%, GEC noted that markets for capital goods were becoming increasingly competitive. The UK remains GEC’s most profitable market and brought in UKP2,101m in revenue. Divisions that reported higher profits than last year were Power Systems, Telecommunications, Electronic Metrology, Electronic Components, Industrial Apparatus and Distribution & Trading. Telecommunications profit leaped 22.7% to UKP54m on turnover that rose to UKP530m from UKP494m. Part of this boost was GEC Plessey Telecommunications Ltd’s sale of System X technology to Moscow company Comstar, in a deal worth UKP50m (CI No 2,562), but 40% of profit at the telecommunications equipment company is attributable to Siemens AG these days. Electronic Metrology doubled its profit to UKP30m thanks to strong demand for petrol pumps in the US. But Electronic Systems’ performance was static, its operating profits the same a last year’s, UKP79m, which the parent company attributed to GEC-Marconi’s continued progression towards the completion of key contracts.

Did less well

However, its order book is 4% higher than at the end of the year in March. Other divisions that also did less well were Consumer Goods, Office Equipment & Printing and Medical Equipment; GEC blamed the markets. Medical Equipment and Office Equipment & Printing actually reported drops in profit. Medical Equipment’s profits fell 42% to UKP11m although sales actually increased and this was attributed to the concerns in the US about health care reform, which should now be behind it given the complete collapse of the Billary health care reform proposals. Within the Office Equipment & Printing division, Videojet’s overseas subsidiaries did well outside the US, but the ill-starred Chicago-based A B Dick dragged the division’s profits down by 5.8% to UKP16m. Since the end of the year, GEC has spent and committed to investing UKP300m on: the purchase, with Matra Marconi Space SA, of British Aerospace Plc’s space venture; the joint venture between Marconi SpA and Finmeccanica SpA; several purchases from the old Ferranti International Plc; and the purchase of 14% of nuclear submarine maker VSEL in support of GEC’s bid for the company which was refered earlier this week to the UK’s Monopolies & Mergers Commission, along with British Aerospace’s rival bid. GEC would not be drawn on whether it is prepared for a bidding war over VSEL Plc but says that the referral does not change its intentions regarding the sub maker, but it did say that it has no intention of renewing the standstill agreement with Aerospace that precludes it from making a hostile bid when it expires next year. GEC has, since the 1980s, been building up its naval systems and shipbuilding activity and says GEC, VSEL would help expand that business. It proposes to pay an interim dividend of 2.95p.