Investors sent Meggitt (MGGT) shares down 4 per cent on the back of these underwhelming full-year figures. Even stripping out currency shifts and disposals - which eroded revenues by about £83m - sales were flat at the engineering group, which provides components and systems to the aerospace, defence and energy markets.
Trading was hit by troop withdrawals from Afghanistan, which curbed military demand for spare parts. The falling oil price was another headwind, causing major oil and gas customers to delay capital spending. Underlying sales to the energy and military sectors slid 3 per cent and 7 per cent respectively. On the plus side, the depressed oil price appears to be fuelling air traffic, driving up demand for plane parts. Second-half after-market sales to civil aerospace customers rose 7 per cent.
There was clear sky elsewhere, too. Meggitt won contracts to supply wheels and brakes on the Gulfstream 500/600 family of aircraft, as well as fire detection systems to the Boeing 737 MAX line and Chinese regional airlines. It also extended its Meggitt Production System, which chief executive Stephen Young describes as a "hearts and minds" manufacturing strategy designed to engage and empower workers. The system has delivered a four-fifths reduction in defective parts per million at the 29 sites that have already adopted it.
Broker Investec expects adjusted pre-tax profits to rise to £376m, giving adjusted EPS of 36.9p (from £336m and 32.1p).
| MEGGITT (MGGT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 550p | MARKET VALUE: | £4.4bn | |
| TOUCH: | 549-550p | 12-MONTH HIGH: | 580p | LOW: 422p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 25 | |
| NET ASSET VALUE: | 268p* | NET DEBT: | 27% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 1.16 | 173 | 20.1 | 9.2 |
| 2011 | 1.46 | 226 | 24.0 | 10.5 |
| 2012 | 1.61 | 281 | 30.1 | 11.8 |
| 2013 | 1.64 | 269 | 29.4 | 12.8 |
| 2014 | 1.55 | 209 | 22.0 | 13.8 |
| % change | -5 | -22 | -25 | +7 |
Ex-div: 19 Mar Payment: 8 May *Includes intangible assets of £2.2bn, or 277p a share | ||||
