Aerospace supplier upgrades annual revenue forecast after strong quarter

Aerospace supplier Meggitt, which is building a £130m HQ in Coventry, is upgrading its revenue forecast for 2019 after a strong third quarter trading.

The company, which specialises in high performance components and sub-systems for the aerospace, defence and energy markets, said trading in the third quarter was stronger than previously anticipated, with overall organic revenue growth of 11%, driven by all end market segments and a particularly strong performance in defence.

In Civil Aerospace, Original Equipment (OE) revenues grew by 4% in the third quarter, driven by good growth in regional and business jets with revenue from large jets slightly ahead of the comparative period.  The group is maintaining its full year guidance of 5 to 7% reflecting its expectation of continued growth in aircraft deliveries to year end.

Civil Aftermarket revenues grew by 4% in the third quarter, where it delivered good growth in large jets against a backdrop of lower air traffic growth and ongoing delays in the delivery of initial provisioning spares for the 737MAX.  Growth in large jets and a good performance in business jets were partially offset by a softer quarter in regional jets.  The group continues to expect full year civil aftermarket organic revenue growth of 3 to 5%.

In Defence, revenues grew by 20% in the third quarter, with strong growth in both OE and the aftermarket reflecting its platform and fleet positions and a continuation of upgrade and retrofit activity in the US.  The group now expects full year organic revenue growth of 9 to 11% (up from previous guidance of 6 to 8%).

In Energy, revenues grew by 26% in the third quarter, driven by a strong performance in its Heatric business.  The project-driven nature of this division means that performance can be unevenly distributed across the year.  The group therefore continues to expect full year organic revenue growth of 0 to 5%.

The company said: “As a result of the group’s strong revenue performance in the quarter, we are upgrading guidance for organic revenue growth for the group for the full year to 6 to 7% (up from 4 to 6% previously).

“While we expect good top line growth for the full year, margin progression will be constrained by mix effects, the grounding of the 737MAX and, as discussed at the half year, pressures across our internal and external supply chain driven by the unprecedented ramp up in new aircraft production.  As a result, full year operating margin is expected to be towards the lower end of our guidance range of 17.7% to 18.2%.

“With exposure to some of the fastest growing platforms and hardest working fleets across both civil aerospace and defence, and continued progress on our strategic initiatives, the group remains well positioned for the future and we look forward to delivering another year of profitable growth.”