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effect on the translation of foreign earnings, the
continued strength of sterling against the euro has not been helpful for
UK exports.
Sales
and profits in Aerospace
increased by 2% to £242m and £39m respectively, leaving margins
unchanged at 16%. Whilst not as rapid as the rise in the comparable
period, the improvement continued a trend which has seen first half
profits double over the past four years. Sales in the defence sector are
now ramping up strongly, more than compensating for the slowdown in
deliveries of equipment for new civil aircraft.
The company’s major
defence programmes include systems for several aircraft now moving out of
the development phase and into production, including Eurofighter Typhoon.
Defence order intake during the period was high,
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assuring a strong
position on the major programmes which will span the decade. The company
has signed an agreement with Boeing, worth $85 million, to supply an
improved power management system for the US
Army’s Apache Longbow helicopter. Firm agreements now concluded with both
contenders for the US Joint Strike Fighter offer the prospect
of high volume, high shipset sales later in the decade, whichever aircraft
wins the contest. The company has teamed with Boeing to become the primary
contractor for the development of aircraft stores management for the US
Navy, and has commenced operation of a new-style Direct Vendor Delivery
agreement with the US Navy to maintain and upgrade existing stores
management systems on most of its carrier-borne aircraft, with a 15
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year
timescale.
There
is also a strong momentum on a large number of programmes with a secure
long-term future, including contracts to upgrade and provide product
support for military aircraft already in service. Altogether,
the company’s defence-related activity is three times the size of
the
civil aircraft original equipment business.
Deliveries of OE civil systems
have already started to decline from last year’s peak of production, ahead of the expected reduction
in aircraft build rates, and the company is well-prepared for this civil
downturn.
As well as supplying
Boeing and Airbus, the company also deals directly with airline operators,
particularly in the
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