A double-digit share price fall at BBA Aviation (BBA) can be explained in several ways. Management blamed an erroneous Bloomberg story published on release of the half-year figures – a story which was subsequently removed. Another catalyst could be the 11 per cent drop in statutory pre-tax profits, exacerbated by costs associated with the Dakota location closure and other restructuring charges. The results also prompted several analyst downgrades to full-year forecasts as operating profits of $167m (£127m) – a 3 per cent increase on the prior year – missed some expectations.
The market could been disappointed to learn that the engine repair and overhaul (ERO) business is up for sale, considering operating profits there rose 40 per cent. But chief executive Mark Johnstone said the division no longer fit with the wider group, and that there'd been "strong interest" from potential buyers.
The US private jet market was also weak, with a 2 per cent rise in flying activity lower than expected. That said, BBA’s private and business airplane servicing business Signature outperformed the market, with sales up 15.4 per cent to $926m, although higher fuel prices put substantial pressure on operating margins.
Analysts at Liberum expect pre-tax profits of $326m during 2018 giving EPS of 25.4¢, compared with $299m and 24¢ in 2017.
| BBA AVIATION (BBA) | ||||
| ORD PRICE: | 302.6p | MARKET VALUE: | £3.12bn | |
| TOUCH: | 302.6-303p | 12-MONTH HIGH: | 370p | LOW: 290p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | 30 | |
| NET ASSET VALUE: | 183¢* | NET DEBT: | 63% | |
| Half-year to 30 Jun | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2017 | 0.90 | 85.8 | 5.10 | 3.81 |
| 2018 | 1.02 | 76.2 | 6.50 | 4.00 |
| % change | +14 | -11 | +27 | +5 |
| Ex-div: | 13 Sep | |||
| Payment: | 02 Nov | |||
| *Includes intangible assets of $2.38bn, or 231¢ a share £1=$1.31 | ||||
