Engineering news
Meggitt, the global engineering company specialising in components and sub-systems for aerospace, defence and energy markets, has reported a 20% fall in first-half pre-tax profit to £98.2 million and an 11% fall in revenue to £718.9 million.
The Bournemouth-based company said continued revenue growth in civil aerospace had been offset by currency (£53 million), disposals (£15 million), and weaker military performance.
Meggitt's military revenues declined by 22% in the six month period to 30 June, falling 13% on an organic basis.
The company said: “Defence expenditure in the US, our single most important military market, remains uncertain given troop withdrawals and a lack of clarity over equipment reset plans.”
Meanwhile, Meggitt said its civil aerospace unit performed better, with revenue growth declining by 5%, although on an organic basis it grew 5%.
The company said its energy and other units faced issues including a continuing shortage of tourmaline, a raw material used to manufacture sensors, and a Brazilian business the unit deals with filing for bankruptcy protection.
Chief executive Stephen Young said: “Performance in the first half was very mixed, with very strong orders but weaker than expected military revenue. Group revenue was lower due to the well-trailed impacts of currency, disposals and an unusually high second-half weighting this year, which also impacted our margin. Orders growth of 9%, including 17% growth in civil aftermarket orders, gives us confidence in a good second half organic revenue and margin recovery, although currency will remain a drag.
“The group made excellent progress in rolling out its operational improvement programme, and has pulled forward plans to roll out some key elements to the supply chain. R&D was at record levels as we deliver record numbers of contracts won in recent years.”
The company's share price fell 7% on the results announcement.
Meggitt employs more than 10,500 people in facilities across Asia, Europe and the Americas. The company has equipment on more than 60,000 aircraft and numerous ground vehicles and energy applications worldwide.