Meggitt sees profits rise as new contracts boost growth prospects
AEROSPACE supplier Meggitt, which has operations in Birmingham and Coventry, has seen revenue and profits rise during the first half and remains confident for the remainder of the year, fuelled by two large contract wins.
In tandem with its interim results statement, the group confirmed details of the contract wins.
The first will see Meggitt Safety Systems supply Russia’s Abris JSC with fire protection equipment for the Irkut MC-21 aircraft programme. The deal is worth £32.6m ($50m). The group has also won a long-term deal with helicopter manufacturer Sikorsky to supply the sponson fuel system for the S-92 aircraft. The contract starts immediately and will run until 2030, with deliveries starting in 2015.
In the six months to June 30, Meggitt saw group revenue rise 4% to £810.1m (2012: £776m), with pre-tax profit increasing 7% to £182.4m (2012: £170m).
Earnings per share grew 9% to 18.1p (2012: 16.6p) and the group is recommending an interim dividend of 3.95p (2012: 3.60p), an increase of 10%.
Stephen Young, Meggitt Chief Executive, said: “The business delivered top line growth in line with our expectations in the first half, with particularly strong performances in the civil OE and energy markets. Military held up well given the challenging budgetary environment, and we have seen a modest recovery in the civil aftermarket in the second quarter.
“The work we are undertaking as part of the raising the bar programme, focusing the group on achieving world-class operations and programme management, underpins our confidence in delivering further strong growth.”
The group said the outlook its civil markets remained very encouraging. Production of large jets is expected to continue to grow in the medium term, and it anticipates a return to growth in both regional aircraft and large-cabin business jet deliveries this year.
In addition, it said available seat kilometres – the key driver of its large and regional jet aftermarket – continues to grow at close to the long term trend rate of 5%. After a period of destocking and consolidation by its aftermarket customers, it said it had seen early signs of a return to growth in the second quarter of 2013 in some businesses, and it anticipated this would gain momentum in the second half.
“We continue to expect sustained growth in our business jet revenues over the medium term driven by an increase in our market share and the increased ship set values resulting from the gradual transition from steel to carbon brakes. We therefore maintain our view that civil OE revenues will grow at an average of 7-8% and civil aftermarket revenues at an average of 8-9% over the medium term, in line with prior guidance,” it said.
In the military market, uncertainties persist around US Department of Defense spending so the market here was difficult to quantify. However, it forecast a modest decline in military revenues in 2013 and 2014 before a return to growth in the medium term.
On this basis, the group has predicted it will deliver mid-single-digit revenue growth for the full year.
