The flight path looks pretty turbulent at private and commercial airlines support services group BBA Aviation (BBA), without taking into account the hefty chunk of exceptional items reported. Nearly $360m (£271m) of one-offs muddy the numbers, notably the $185m impairment charge it took against the engine, repair and overhaul (ERO) business because of the "continuing challenges" it faces there. It also booked a near-$130m writedown against its aircraft service business, ASIG, as the group plans to sell it.
Another major one-off cost of $44.7m was linked to its acquisition of Landmark Aviation, which it completed in February. The good news is that rapid integration of the target company created $8.7m in cost synergies in the first half. This means management still reckons it can hit at least $35m of synergies from 2017. Landmark contributed $62m of underlying operating profits to the flight support division's $142m total, thus accounting for most of the 84 per cent reported growth.
But things weren't so upbeat in the after-market services division, although this only accounts for 7 per cent of underlying operating profits. Sales and profits slumped due to the poor performance from the ERO business.
Analysts at Liberum expect pre-tax profits of $239m for the year to December 2016, leading to EPS of 19.1¢, compared with $170m and 20.1¢ in 2015.
| BBA AVIATION (BBA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 249p | MARKET VALUE: | £2.57bn | |
| TOUCH: | 248.7-249.2p | 12-MONTH HIGH: | 250p | LOW: 150p |
| DIVIDEND YIELD: | 3.0% | PE RATIO: | 44 | |
| NET ASSET VALUE: | 176p* | NET DEBT: | 79% | |
| Half-year to 30 Jun | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2015 | 0.88 | 51 | 11.6 | 3.47 |
| 2016 | 1.02 | -153 | 10.9 | 3.63 |
| % change | +16 | -399 | -6 | +5 |
Ex-div: 15 Sep Payment: 4 Nov *Includes intangible assets of $2.49bn, or 242¢ a share £1=$1.32 | ||||
