Meggitt profit beats market expectations

Meggitt PLC on Tuesday reported net profit for 2019 which beat market expectations on growing revenue but said organic growth will slow in 2020.

The U.K. engineering company–which specializes in the aerospace, defense and energy markets–made a net profit of 222.6 million pounds ($287.7 million) for 2019. This compares with GBP179.0 million in 2018, and was above the market consensus of GBP174.1 million–taken from FactSet and based on forecasts from eight analysts.

Revenue rose to GBP2.28 billion from GBP2.08 billion, with growth across all civil aerospace, defense and energy divisions. On an organic basis revenue rose 8% compared with Meggitt’s upgraded guidance of 6% to 7% given last November.

Orders during the year grew 10% organically to GBP2.47 billion.

Underlying operating profit–one of the company’s preferred metrics, which strips out one-off items–increased to GBP402.8 million over the year from GBP367.3 million. This was above market expectations of GBP398.4 million, taken from FactSet and based on forecasts from 12 analysts.

The board declared a final dividend of 11.95 pence per share, taking the 2019 full-year payout to 17.50 pence, up from 16.65 pence in 2018.

For 2020, Meggitt said that it expects organic revenue growth in the 2% to 4% range, and underlying operating margin growth of 30 to 50 basis points, as factors including the production halt of the 737 MAX and supply chain disruption, as well as the impact of the novel coronavirus outbreak are expected to hold back margin progression. Underlying operating margin growth was flat in 2019.

The company also said Chairman Nigel Rudd won’t seek reelection at the 2021 annual general meeting as he intends to spend more time on his business and other interests.

Write to Jaime Llinares Taboada at [email protected]; @JaimeLlinaresT

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