News Column

Meggitt shares slide on lower revenue forecast

August 6, 2014

SUZIE NEUWIRTH



SHARES in Meggitt plunged yesterday, after the British aerospace firm trimmed its full-year revenue guidance due to a weaker than expected performance from its military unit.


The FTSE 100-listed firm said that it now expected low-single-digit revenue growth this year, down from mid-single-digit growth. It is Meg-gitt's second revenue downgrade in nine months.


Pre-tax profit for the first half of the year plunged 21 per cent to 143.8m, while revenue fell 11 per cent to 718.9m.


The company said revenues in its military business, which accounted for one third of sales, had fallen by 13 per cent, due to the winding down of programmes, the return of equipment from Afghanistan and delays to shipments.


"The outlook for defence expenditure in the US, our single most im-portant military market, remains uncertain given troop withdrawals and a lack of clarity over equipment reset plans," said the company.


It also said that a strong pound wiped 53m off revenues and was likely to continue to have an impact.


Shares plunged eight per cent in early trading, before recovering a little to close 4.7 per cent lower at 479.90p.


Meggitt, which supplies aircraft parts to planemakers Airbus and Boeing, said that the outlook for its civil aerospace markets "remains encouraging", but said its energy business had suffered from credit problems with a partnering comp-any in Brazil.


The firm raised its dividend by eight per cent to 4.25p per share.


Meggitt shares slide on lower revenue forecast BY SUZIE NEUWIRTH 13 per cent, due to the winding down of programmes, the return of equipment from Afghanistan and delays to shipments.


civil aerospace markets "remains encouraging", but said its energy business had suffered from credit problems with a partnering comp-any in Brazil.


SHARES in Meggitt plunged yesterday, after the British aerospace firm trimmed its full-year revenue guidance due to a weaker than expected performance from its military unit.


The firm raised its dividend by eight per cent to 4.25p per share.


"The outlook for defence expenditure in the US, our single most im-portant military market, remains uncertain given troop withdrawals and a lack of clarity over equipment reset plans," said the company.


Meggitt PLC p The FTSE 100-listed firm said that it now expected low-single-digit revenue growth this year, down from mid-single-digit growth. It is Meg-gitt's second revenue downgrade in nine months.


479.70 5 Aug 530 520 510 It also said that a strong pound wiped 53m off revenues and was likely to continue to have an impact.


500 490 Pre-tax profit for the first half of the year plunged 21 per cent to 143.8m, while revenue fell 11 per cent to 718.9m.


Shares plunged eight per cent in early trading, before recovering a little to close 4.7 per cent lower at 479.90p.


480 470 The company said revenues in its military business, which accounted for one third of sales, had fallen by Meggitt, which supplies aircraft parts to planemakers Airbus and Boeing, said that the outlook for its 4 Aug 5Aug 30Jul 31Jul 1 Aug ANALYST VIEWS Interviews by Suzie Neuwirth WHAT IS YOUR VERDICT ON MEGGITT'S HALF-YEAR RESULTS? SASH TUSA EDISON INVESTMENT RESEARCH When a company describes its markets as "challenging" in the headline and focuses on orders and not profits, you can tell that the rest of the results are below par. With shares below early-2014 levels, the likelihood of another major debt-funded acquisition on the back of the strengthened balance sheet is now harder for shareholders.


BEN BOURNE LIBERUM The market is likely to downgrade its full-year earnings per share forecast by eight per cent to around 34p. Military revenue was weaker than expected. Foreign exchange movements, disposals and an unusually high second-half weighting reduced the first-half margin. However, orders grew by nine per cent.


MIKE VAN DULKEN ACCENDO MARKETS The change in management's outlook and growth forecasts comes from declines in military sales becoming even more severe than it had anticipated. Investors don't look to be hanging around for a second-half recovery nor taking the eight per cent interim dividend increase as recompense for staying the course.


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Source: City A.M. (UK)


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