Westland predator bides its time: GKN settles down for long fight as it reports profit fall

SIR DAVID Lees, chairman of GKN, indicated yesterday that he was prepared for a lengthy battle to win control of Westland, the helicopter group that has rejected a pounds 497m bid despite GKN's claim that it is offering a fair price.

'We have been minority shareholders in Westland for five years and we are happy to stay as minority shareholders for the next five years,' he said after announcing a drop in GKN's pre-tax profits from pounds 121.8m to pounds 97.5m. GKN has a fully diluted 45 per cent stake in Westland after acquiring 18.7 per cent from United Technologies of the US. GKN's profits, foreshadowed at the time of the Westland offer three weeks ago, were hit last year by a jump in redundancy and reorganisation costs from pounds 12.9m to pounds 19.9m and the downturn in mainland European car and commercial vehicle markets, where production volumes fell nearly 25 per cent. The company is forecasting a 4 per cent rise in Western European car production in 1994 and a 6 per cent rise in the output of commercial vehicles.

GKN has drawn on its reserves, as in 1992, to pay an unchanged dividend of 20.5p with a final of 8p. Earnings of 14.7p a share, down from 18.6p, remain depressed by a high tax charge of 38.7 per cent, caused in part by GKN's inability to recover all its advance corporation tax bill because UK profits are too low. The acquisition of at least 75 per cent of Westland will allow it to reduce its pounds 140m accumulation of unrelieved ACT.

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