Meggitt (MGGT) chief Terry Twigger hands over to finance boss Stephen Young in May, just as US sequestration cuts begin to bite. Thankfully, an impressive civil aerospace operation and fast-growing energy business should fill the gap and generate mid-single-digit growth this year.
Defence, which generates 39 per cent of sales, will be little help. Supplying parts for the Typhoon, Rafale and F-18 fighter jets boosted revenues by 7 per cent last year. However, withdrawal from Afghanistan and Iraq will mean a flat 2013 and, if US cuts do happen, management estimates group sales will take a 1 per cent hit both this year and next.
Crucially, civil aerospace work is flooding in - revenue rose 7 per cent to £715m in 2012 and the division now generates 45 per cent of sales. Meggitt has parts on every major programme, including the Boeing 787 and the Airbus A380, and thousands of new lightweight jets will be built over the next few years. What's more, the airlines are tipped to end destocking within months, kick-starting the lucrative aftermarket business. Management also forecast double-digit growth in sensors, valves and heat exchangers over the next few years, following a 45 per cent surge at the energy unit in 2012.
Broker Liberum Capital expects adjusted pre-tax profit of £392m in 2013, giving EPS of 37.8p (up from £362.6m and 35p).
MEGGITT (MGGT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 473p | MARKET VALUE: | £3.71bn | |
| TOUCH: | 472-473p | 12-MONTH HIGH: | 480p | LOW: 362p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 15 | |
| NET ASSET VALUE | 243p* | NET DEBT: | 34% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 1.16 | 119 | 15.0 | 8.45 |
| 2009 | 1.15 | 181 | 20.5 | 8.45 |
| 2010 | 1.16 | 173 | 20.1 | 9.20 |
| 2011 | 1.46 | 226 | 24.0 | 10.5 |
| 2012 | 1.61 | 292 | 31.1 | 11.8 |
| % change | +10 | +29 | +30 | +12 |
Ex-div: 13 Mar Payment: 10 May *Includes intangible assets of £2.7bn, or 344p a share | ||||
