West Sussex-based automotive technology group Ricardo said the industry was showing signs of recovery as it signalled better-than-expected first half results.

Ricardo, based at Shoreham, said in November that it expected challenging conditions in its core vehicle engineering technology and consultancy markets to hit its first six months to December 31.

But it now expects broadly to break even before tax, goodwill and the costs of 250 redundancies.

The group, which provides car makers with engineering services ranging from individual component design to complete new engine and vehicle programmes, said it had seen a "significant improvement" in bidding opportunities and increased customer interest and business activity towards the end of the first half.

December was the group's best month for order intake since June. Potential order enquiries rose by £40 million during the month after staying flat since December 2002.

The group reduced its headcount by about 250 people through a mix of redundancies and releasing contract workers. Some 150 staff had left by the end of last year and a further significant reduction is planned for very early in 2004, it said.

The cuts would result in annual cost savings of about £10 million, which are expected to start showing benefits in the second half.

Ricardo also restructured its management, which it said would result in an exceptional charge of about £3.3 million in the first half.

The group said there were some "initial signs" that its automotive market may be on the turn.

"We are confident that Ricardo is well positioned to return to growth as the market recovers," it said.

Tuesday January 06, 2004