Shares in Meggitt (MGGT) nose-dived 7 per cent on these numbers, making them the biggest faller on the FTSE 100. Management told us they believed the sell-off was due to a weaker than expected organic revenue performance in the first half. Sales at the plane parts group fell 3 per cent on an organic basis, as a good performance on the commercial side was more than offset by weakness in military.
Currency headwinds and business disposals reduced reported revenue further still. The operating margin dropped nearly 3 percentage points due to an unusually high second-half weighting this year and an unfavourable product mix. That meant profits fell by more than revenue, with adjusted pre-tax profit slumping by a fifth to £144m.
On the plus side, orders were up 9 per cent in the first half, and within that civil aftermarket - the most profitable part of the business - orders rose 17 per cent. Management says this "bodes well for the second half".
Nevertheless, the weaker than expected first half has led management to guide market expectations towards low single-digit organic revenue growth for the full year - a downgrade from the previous guidance for mid-single-digit growth. Bank of America Merrill Lynch cut its full-year earnings per share forecast by 7 per cent to 33p (2013: 36.9p), with 35p expected next year.
| MEGGITT (MGGT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 467p | MARKET VALUE: | £3.8bn | |
| TOUCH: | 466-467p | 12-MONTH HIGH: | 575p | LOW:445p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 254p* | NET DEBT: | 28% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 810.1 | 122 | 13.0 | 3.95 |
| 2014 | 718.9 | 98 | 10.2 | 4.25 |
| % change | -11 | -20 | -22 | +8 |
Ex-div:13 Aug Payment:03 Oct *Includes intangible assets of £1.4bn, or 176p a share | ||||
