Bad start, but BLMC optimistic

By A Goodrick-Clarke

British Leyland aims more or less to match the 1970-71 profit of £32rm in the current year. But there has been a bad start. First half profits, affected to an unquantified degree by the miners' strike and other industrial disputes, are 24-5 per cent, or £2.3m, down at £7.2m.

In making his forecast for the year, which requires a profit of some £25m in the second half, Lord Stokes, the chairman, said yesterday that this depended upon "reasonable continuity of production". The value of sales so far this year is up by 8 per cent to £577m, an increase which was achieved by substantial destocking both by the group and its distributors.

Sales volume was 13 per cent, or 63,000 units, higher at 537,000 units. Production was affected by the coal strike, which cost the company " several million pounds", and by internal disputes. In the past 12 months, BLMC has suffered 12 major strikes and lost 5.2 million man hours. But Lord Stokes reported substantial progress towards achieving new wage structures. Almost half the group's workforce have now changed from traditional piecework payment systems to flat day rate.

Demand for the company's cars, particularly in the home market, "continues to exceed supply". Production of Marina cars should reach 5,000 a week at Cowley by the autumn. The picture overseas is not so good. South African profits in the first half slumped from £2m to only £100,000, and conditions in Australia have been difficult.

Increasing competition and reorganization have affected export markets. Sales were some 10 per cent down in value in the first six months. In common with its competitors, BLMC underestimated the timing of the commercial vehicle recession in this country. Only now is business showing signs of recovery across the range.

Liquidity, reflecting the first proceeds of the rights issue and disposals (notably of the Maudslay Motor axle business to North American Rockwell for £4.5m), is said to be "excellent at the moment". Yesterday BLMC announced another sale, that of the Transport Equipment Thornycroft site at Basingstoke to English and Continental Property and its heavy transmission manufacturing business to Eaton Corp. of the United States, for £5m in cash.