![[ image: width=150]](/olmedia/230000/images/_230804_lucas_varity_logo150.jpg){kind=logo}
The company's earnings were dented by a bill of £13m it had run up in an aborted attempt to shift its head office to the US.
The company suffered an embarrassing defeat in a shareholder vote on its decision to move across the Atlantic amid claims that its directors were looking to cash in on the much higher pay packets available in the US.
LucasVarity's profits for the three months to October fell to £71m from £85m during the same period in the previous year.
LucasVarity's chief executive Victor Rice , who has suffered a barrage of criticism from shareholders, tried to put the damaging defeat behind him.
He described LucasVarity's results as satisfactory and said it was "business as usual"
But difficult trading conditions have added to the group's woes.
It warned that demand for parts Asia and South America has begun to fall.
Falling production
Production levels in the two regions are expected to fall back by around 3% and 4% respectively compared with their 1998 levels.
Some European car makers are also cutting back production as demand slows, which is likely to constrain LucasVarity's growth.
LucasVarity's turnover fell from £1.03bn from £1.16bn.
However underlying sales at the group, stripping out a £24m hit from the strong pound, increased by more than 5% and operating profits grew 16.3%.
Moving overseas?
There is growing speculation from City analysts that LucasVarity will make a second attempt to move abroad.
The group claims a move is vital to allow it to participate in the consolidation of the car and aerospace industry.
Shares in LucasVarity had slipped 2p to 196p by 1515 GMT.
LucasVarity shares stall
(09 Nov 98 | The Company File)
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