5th Mar 2014 08:08
LONDON (Alliance News) - BBA Aviation PLC Wednesday reported a 16% rise in 2013 pretax profit as acquisitions buoyed revenues and it lifted margins and cut its finance costs, and it predicted progress in 2014 despite an unexpected slowdown in some businesses.
In a statement, the aviation services company warned that revenues had been lower-than-expected in its engine repair and overhaul business and are set to remain subdued in 2014. It also cautioned that its Legacy aftermarket services business is set to pause this year after some major contracts were completed last year. However, it is seeing signs of a recovery in the North American business and general aviation unit.
"This, together with the incremental contribution from strategic investments already announced, an additional USD24 million of acquisitions and new licences agreed since year-end, continuing operational improvements and a solid investment pipeline, gives us confidence that 2014 will be another year of progress for BBA Aviation," Chief Executive Simon Pryce said in a statement.
The company reported a pretax profit of USD145.2 million for 2013, up from USD125.1 million in 2012, outperforming the 2% rise in revenues to USD2.22 billion, from USD2.18 billion. Its operating margin improved slightly to 9.0%, from 8.9%, while it cut its net interest expense by USD5.3 million after closing out high interest rate swaps in the middle of 2012.
Operationally, the company reported organic revenue growth of 4% in its flight support business and an operating profit increase of 5% excluding exceptional items. Organic revenues fell 2% in its aftermarket services and systems business, but its operating profit excluding exceptional items still rose 2%.
It made or committed USD150 million in strategic investments in 2013, including buying four flight support businesses.
It raised its 2013 dividend to 15.40 cents, from 14.65 cents.
"Over the longer term, the underlying strengths of our market-leading businesses, the continuing improvement in their operational performance and the structural growth and consolidation in our major markets give us increasing confidence in our ability to generate superior through-cycle returns," Pryce said.
Separately, BBA said group Finance Director Mark Hoad will step down at the end of June after nine years with the company. It said it has started looking for a successor.
"After nine years with the group I feel that it is now the right time for me to seek a new set of challenges. I am confident in the strategy the group is pursuing and that the great people at BBA Aviation will continue to deliver success," Hoad said.
BBA Aviation shares were down 2.9% at 343.3 pence early Wednesday, one of the biggest declines on the FTSE 250.
By Steve McGrath; [email protected]; @SteveMcGrath1
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