2nd Jul 2020 09:34
(Alliance News) - Meggitt PLC on Thursday said it expects a sharp drop in revenue in the first half of 2020, with falling revenue in its Civil Aerospace and Energy offsetting any growth in Defence.
Shares in the aerospace and defence contractor were 8.0% higher in London on Thursday morning at 329.50 pence each.
Coventry-based Meggitt said Civil Aerospace organic revenue in the six months that ended on Tuesday is expected to be about 30% lower, with its Jets business struggling.
Its Energy unit expects to see revenue down 10% year on year, reflecting weaker market conditions in oil and gas and power generation sectors.
Meggitt's Defence unit, however, is expected to deliver organic revenue growth of mid-single digits.
"We continue to see good order flow and expect demand in this part of the business to remain robust throughout 2020," Meggitt added.
For the second quarter, organic revenue is expected down 30% year on year.
Meggitt said it made "good progress" in its plan to reduce cost base, preserve cash and resize its business.
The company continued: "The reduction in our global workforce is proceeding as planned and, as a result of the early actions taken in the first quarter, we anticipate being able to derive higher savings than originally planned from reducing our discretionary operating costs."
Meggitt said it remains on track to reduce its cashflow in 2020 by between GBP400 million and GBP450 million.
The firm ended May 31 with GBP1.63 billion in committed facilities and with headroom of GBP662 million.
Meggitt said it expects "significant" free cash outflow in the first half, caused by lower profit and cost reductions being second-half weighted.
Looking ahead, the company said the "initial signs" of recovery in commercial aerospace has emerged, as commercial airlines bring more of their fleet back into service in the US.
"Notwithstanding these early positive signals, and as we look ahead to the performance of the sector and our civil aerospace business in the second half, uncertainty and risk remain about the duration of the pandemic and its impact on the pace and shape of any recovery, including the potential for a second wave," Meggitt added.
By Paul McGowan; [email protected]
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