Currency fluctuations lift aerospace group in flat markets

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Currency fluctuations have helped to boost aerospace and energy supplier Meggitt despite first half trading being subdued.

The group, which has a clutch of operations in the West Midlands, saw flat organic revenue growth in the first six months, largely due to subdued military and defence spending.

However, positive currency movements helped the group to a 10% growth in reported revenues, a situation aided by growth (2%) in the civil aerospace sector.

For the six months to June 30, 2017, the group reported a 6% growth in orders to £966.8m (H1 2016: £911.8). However, this actually represented a 2% decline on an organic basis.

Reported revenue was £968.1m (H1 2016: 882.9m), while underlying pre-tax profit showed a reported growth of 4% to £157.4m (H1 2016: £152m) although in organic terms, declined 6%. Earnings per share saw marginal growth of 1% to 15.5p (H1 2016: 15.4p).

Stephen Young, chief executive, Meggitt, said: “First half results were in line with our expectations, with reported revenue growth helped by favourable currency movements and organic growth in our civil aerospace business, partly offset by lower energy revenues.

“We continue to expect stronger growth in the second half with a corresponding improvement in margin.  We reiterate our guidance of 2 to 4% organic revenue growth and our operating margin target of 19.1 to 19.4% for the full-year.”

Over the medium term, he said the group was set to benefit from improving conditions in many of its end markets and from the strategic investments made by the business over the past five years.

“We continue to focus on accelerating progress on our key operational initiatives, which we expect will deliver a 200 to 250 basis point net improvement in operating margin and £200m incremental cash from increased inventory turns by 2021,” he added.

Reflecting continuing confidence in the prospects for the group, the interim dividend has been increased by 5% to 5.05p.

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