Bottom Line: Ferranti still in the doldrums

FOUR years on from the disclosure of fraud at its American subsidiary ISC, Ferranti, the defence electronics group, is still swimming against the tide. Yesterday's loss, the fourth in a row, was accompanied by an admission that the company is looking for an equity injection from a more robust partner.

Eugene Anderson, chairman, is candid about Ferranti's problems. The order book, at pounds 200m, is pounds 50m lower than a year ago. Customers are still nervous about placing business with a company which, despite confirmation of bank support until next June, is still shakily financed.

Borrowings rose last year from pounds 67m to pounds 91m, although most of the increase came from one-off reorganisation and litigation costs. Cash is no longer flooding out of the business but that debt sits precariously on top of shareholders' funds of pounds 55m.

The pre-tax deficit in the year to March emerged at pounds 24.5m from sales of pounds 231m, half last year's pounds 46m loss but a long way from recovery and there is no dividend.

Ferranti is unlikely to make a profit this year and thereafter much will depend on when and if it secures a pounds 100m air defence system contract in the Middle East.

If it does, a modest profit can be expected in 1995 but recovery is going to be a long haul. The shares, which fell 2.75p to 12.25p yesterday, reflect a difficult market and certain dilution of shareholders' stakes. They are likely to stay in the doldrums.