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BBA wins from winter freeze

RESULTS: BBA is outperforming its key markets, but that’s already reflected in the valuation
August 8, 2013

A colder winter in the US meant more de-icing work for BBA Aviation (BBA) and a 6 per cent increase in underlying operating profit to $94m (£61m). And in a flat market, organic revenue, which strips out lower fuel prices and acquisitions, grew 2 per cent. Admittedly, there's little evidence of a significant pick-up in activity, but it's a matter of when, not if, says chief executive Simon Pryce.

IC TIP: Hold at 297p

In the meantime, BBA has been helping itself. Slimming down the business from five to two divisions is beginning to show benefits, and there's more to come from operational improvements, says Mr Pryce. Organic revenue at the core flight support business rose 3 per cent and profit jumped 9 per cent to $58.6m, driven by a return to more normal demand for de-icing services. However, the engine repair and overhaul business failed to match last year's strong half and revenue there fell 7 per cent. That offset strong growth at the smaller landing gear and legacy platform services operations, nudging sales at the aftermarket services division down slightly, although profits still rose by 2 per cent to $45.1m.

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