The 2.5 per cent share price decline that greeted half-year numbers from Meggitt (MGGT) suggests the market was hoping for stronger signs of a recovery from last October's profit warning. And while last year's comparable period was a particularly strong one, the 51 per cent decline in statutory operating profit to £63m in the first six months of 2016 explains management's caution against raising expectations above February's full-year guidance for "low-single digit" organic revenue growth.
Finance chief Doug Webb is also confident the manufacturer of aircraft parts and drones can bring net debt to within 2.5 times cash profits by the end of the year, in line with rolling targets. The 79 per cent hike in cash-adjusted borrowings against 30 June 2015 was caused by a mixture of new acquisitions, a £112.7m negative exchange rate adjustment to non-current loans, and a weighting of cash flows and profit phasing towards the autumn.
That seasonal weighting is also reflected in the order book, which increased by 6 per cent on an organic basis, and by nearly a fifth to £912m after adjusting for new acquisitions. The company expects that order book to be further supported by the recently launched customer services and support (CSS) division, which aims to build Meggitt's share of the after-market for its components.
Analysts at Morgan Stanley are guiding for full-year pre-tax profits of £342m and adjusted earnings per share of 33.9p.
MEGGITT (MGGT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 424p | MARKET VALUE: | £3.28bn | |
| TOUCH: | 423.6-424p | 12-MONTH HIGH: | 514p | LOW: 338p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | 26 | |
| NET ASSET VALUE: | 293p* | NET DEBT: | 56% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 794 | 116 | 12.5 | 4.6 |
| 2016 | 883 | 46.6 | 5.4 | 4.8 |
| % change | +11 | -60 | -57 | +4 |
Ex-div: 8 Sep Payment: 30 Sep *Includes intangible assets of £2.7bn, or 352p a share | ||||
