Meggitt sees strong Q3 and forecasts growth

AEROSPACE and defence group Meggitt has announced a strong third quarter with orders up 17% on the same period last year.

The group, which includes Coventry-based Meggitt Aircraft Braking Systems (MABS), said it had seen increases across all market segments except military aftermarket, which had been expected.

“We have now seen double digit increases in total orders in quarters two and three and, cumulatively, order intake is 7% ahead of 2009.  Within this, civil orders are up 27% (aftermarket up 18%) and military orders were down 8%, largely due to multi year orders received in 2009,” it said in its Q3 statement, which covers the period between July and the end of October.

Q3 revenues grew year on year by 1%, which followed declines of 10% and 2% in the first and second quarters respectively.

The group said the improving trend gave it confidence of further growth during the fourth quarter and modest growth for the full year.

“In the quarter, civil original equipment, civil aftermarket and energy revenues were ahead of last year.  As expected, military revenues were down in the quarter.  However, with military orders up 10% in the period, we expect this to translate into strong sales growth in the fourth quarter,” it said.

Leading civil market indicators, such as aircraft deliveries and air traffic/aircraft utilisation continue to be positive and the group said its energy business was also recovering.  It expects these markets to continue to recover in 2011.
 
The group said it was likely the Strategic Defence and Security Review would have only a minimal impact on military revenues, with 2011 seeing a £3m reduction. More importantly for the group, US defence spending is still projected to grow at low single digits in the medium term.

Keeping a tight hold on costs will continue and the group said this would be reflected in operating margins, which are continuing to improve.  Volumes are expected to recover in 2011 but the group said this was likely to mean some increases in cost and investment to support growth.

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