VT Group battens down the hatches despite high profits

Support Services firm VT Group said yesterday it was looking to contract, despite reporting a better-than-expected 41 per cent surge in underlying profit, and upping its dividend by 10 per cent.<br /><br />VT is expecting to do well as cost-conscious firms look to save money by outsourcing, but wants to slim down to prepare for a reduction in government spending, which will come after the next election.<br /><br />VT has already axed 100 jobs as it seeks to restructure, and said yesterday it expects to slash a further 300 in the next year. The cost-cutting move will save around &pound;7m a year, it said.<br /><br />The group also gave details of how it will be structured after the sale of its 45 per cent stake in the navy shipbuilding fleet, BVT Surface Fleet, to BAE Systems.<br /><br />By severing ties with BVT, the company will end its 150 year connection with ship building.<br /><br />VT will go from five to three divisions, and move closer to vital customers like the Ministry of Defence.<br /><br />Despite the surge in underlying sales to &pound;1.02bn, pre-tax profit at the company fell by 29 per cent to &pound;32.2m, after paying huge restructuring costs related to he formation of BVT.<br /><br />Chief executive Paul Lester said he &nbsp;wanted to use cash from the shipbuilding divestment for an acquisition spree once the deal completes in the autumn. He said: &ldquo;In the latter half of this year and into next there should be opportunities to buy good businesses at decent prices.&rdquo;<br />