Meggitt (MGGT) continued its search for operational efficiencies across 2018, cutting its 56 sites to 45, with eight further closures on the horizon over the next three years. Construction continues at the aerospace and defence engineer’s £130m new ‘super-site’ in Coventry, which is due to complete near the end of this year.
The move towards fewer, larger sites accompanies its transition from a holding company into a “customer-aligned” group as of 1 January 2019, with four divisions that cover air-frames, engines, energy and equipment, and services and support. Meggitt has also made a series of divestments, the latest being the sale of one of its French businesses, Meggitt (France) SAS, to a subsidiary of AF Technologies, due for completion in April 2019.
Free cash flow fell by £30m to £167m, following a £30m payment into its US pension scheme and a £38m boost to inventory, buffers to support its growth, site consolidation and its Brexit contingency plans. Notwithstanding, its inventory turnover rose to 2.7 times from 2.5 times. Meggitt claims that this lowered the investment it needed to drive growth by £43m.
Broker Morgan Stanley forecasts full-year 2019 EPS of 36.9p, increasing to 41.1p in 2020.
| MEGGITT (MGGT) | ||||
| ORD PRICE: | 544p | MARKET VALUE: | £ 4.23bn | |
| TOUCH: | 544-545p | 12-MONTH HIGH: | 584p | LOW: 416p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 321p* | NET DEBT: | 43% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 1.55 | 209 | 22.0 | 13.8 |
| 2015 | 1.65 | 210 | 23.2 | 14.4 |
| 2016 | 1.99 | 196 | 22.1 | 15.1 |
| 2017** | 1.99 | 228 | 37.8 | 15.9 |
| 2018 | 2.08 | 216 | 23.2 | 16.7 |
| % change | +4 | -5 | -39 | +5 |
| Ex-div: | 21 Mar | |||
| Payment: | 03 May | |||
| *Includes intangible assets of £3.22bn, or 415p a share. **Year restated for IFRS 15 accounting rules | ||||
