Meggitt making good progress on £130m Ansty Park factory

How the Meggitt facility will look

Global engineering company, Meggitt’ has said it is making good progress on the development of a new £130m factory in Coventry that will be home to 1,000 people.

The move will see group’s existing sites in Tyseley and Coventry, as well as Maidenhead, closed consolidated in a single, 440,000 sq ft facility at Ansty Park.

Writing in its full year results statement, the company, which specialises in high-performance components and sub systems for the aerospace, defence and energy markets, said moving more work into larger, more capable sites was a key component of its site rationalisation strategy.

“It provides attractive opportunities for return on investment as such projects enable us to eliminate some of the fixed costs required to run individual aerospace sites whilst supporting investment in state of the art equipment that will increase efficiency and improve customer service delivery,” it said.

“The £130m investment in Ansty Park, which is being developed with partners, is central to this strategy. Subject to concluding consultation and receiving the required planning approvals, construction is due to commence in 2018 with the site opening in late 2019.”

The rationalisation programme is likely to have an impact on future capital expenditure, which will increase further in 2018, it added.

For the year ended December 31, 2017, the group saw a 5% reported increase in orders to £2,082.6m (2016: £1,990.5m), with revenue up 2% on the same basis to £2,027.3m (2016: £1,992.4m). Underlying EBITDA rose 4% to £505.8m (2016: £487.8m), with pre-tax profit up 2% at £357.9m (2016: £352.1m).

The group said it had made good progress on a number of strategic initiatives during the year, which had contributed to growth in margins and cash. Both these provide solid foundations for continued growth.

On the basis of the above, the group said it expected organic revenue growth of 2 to 4% in 2018 (after excluding divestments from base revenue in 2017).

Tony Wood, chief executive, said: “2017 trading was in line with our expectations with the stronger second half contributing to good organic growth across the group, a 10 basis point improvement in margin and 42% growth in free cash flow.

“Following organic order growth of 6% in 2017, we expect these trends to continue into 2018, with expected revenue growth of 2% to 4% and continued operating margin improvement, prior to the impact of new accounting standards.”

He added: “We have delivered initial savings from our supply chain initiative and made good progress in executing our footprint strategy, most notably with the announced plans to move four of our current UK operations to a single site at Ansty Park.”

Reflecting the continuing confidence in the prospects for the group, it has recommended a final dividend of 10.80p, giving a full year dividend of 15.85p, an increase of 5%.