BBA has proved pretty resilient in a severe recession that hit its business and general aviation customers with underlying operating profits down a modest 8 per cent to £100m. Cash generation was robust with free cash flow of £137m, up 78 per cent on the prior year, helping to cut net borrowings by £163m.
The group's relatively early-cycle Flight Support business, accounting for 56 per cent of operating profit, saw underlying sales decline 6 per cent, but the business turned the corner in the final quarter showing modest growth and BBA's Signature arm has been winning new contracts including a new five-year deal with NetJets.
However, BBA's Aftermarket Services and Systems businesses have yet to see a recovery with like-for-like sales declining by 17 per cent as engine repair and other services were hit by falling demand for original equipment manufactures, as was BBA's landing gear and hydraulics business, most notably from Cessna and Hawker Beechcraft. Demand is likely to remain weak for the time being given the depressed state of aircraft order books.
Cazenove has upgraded its adjusted pre-tax profits estimates by 7 per cent to £85.4m, giving EPS of 15.9p (2009: £78.2m/14.6p), reflecting an exchange rate of £1:US$1.60 on North American profits.
BBA AVIATION (BBA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 168p | MARKET VALUE: | £ 711m | |
| TOUCH: | 167-168p | 12-MONTH HIGH: | 181p | LOW: 62.5p |
| DIVIDEND YIELD: | 4.5% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 106p* | NET DEBT: | 88% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | 0.88 | 38.3 | 6.6 | 11.8 |
| 2006 | 0.95 | 70.2 | 10.3 | 7.1 |
| 2007 | 0.98 | 86.4 | 15.4 | 7.6 |
| 2008 | 1.16 | 84.2 | 15.3 | 7.6 |
| 2009 | 1.08 | 60.0 | 11.4 | 7.6 |
| % change | -7 | -29 | -25 | - |
Ex-div:03 Mar Payment:21 May *Includes intangible assets of £573m, or 135p per share | ||||
