Aerospace supplier Meggitt contemplates 300 job losses after difficult Q3

AEROSPACE supplier Meggitt has warned it could axe 300 jobs across its global operations as it looks to reduce costs in the wake of declining demand.

The company, which has operations in Birmingham and Coventry, said in a Q3 trading update that performance had been below expectations, due to a marked deterioration in September.  

It said continued organic (excluding the effects of M&A and foreign exchange) growth in civil original equipment of +2% was more than offset by weaker than expected trading in civil aftermarket (0%), military (-2%) and energy (-16%) markets, resulting in an organic decline of 1% in the quarter.
 
“Profitability in the third quarter has been impacted by mix, both across end markets and within the aftermarket following lower than anticipated spares volumes for older civil and military aircraft,” it said.

“Additionally, lower volumes and a number of programme deferrals announced by customers have also impacted margins.  Energy markets continued to weaken, with the further organic decline resulting in lower than expected overhead absorption.”  

It said these factors were expected to persist through the fourth quarter, which would result in underlying operating profit for the year being meaningfully below the company’s current estimate of £369m.  

“In response to current trading conditions, we have expanded our cost reduction activity and are assessing options to reduce our global employee base by approximately 300.  This process will be complete, subject to consultation where required, by the end of the first quarter 2016.  The associated cost will be taken as an exceptional charge in 2015,” it said.  

Stephen Young, Meggitt’s chief executive, said the market weaknesses were disappointing. However, he said the business continued to invest in delivering the new programmes won in recent years, and remained confident in the medium to long-term strategic direction and financial performance of the group.