24th Feb 2015 07:32
LONDON (Alliance News) - Meggitt PLC Tuesday reported lower profits for 2014, hit by a range of factors including adverse exchange rates, disposals, research and development spending and higher sales of less-profitable products, but it said it had returned to organic revenue growth in the second half of the year and its order book has increased.
The engineer of components for the aerospace, defence and energy markets also raised its final dividend, a move it said reflects its continuing confidence in its prospects.
Meggitt reported a pretax profit of GBP208.9 million for 2014, down from GBP269.4 million in 2013, as revenue fell to GBP1.55 billion, from GBP1.64 billion. Its underlying operating profit, which strips out exceptional items and amortisation, declined to GBP346.0 million, from GBP397.2 million.
It said currency movements wiped GBP57 million off its revenue, while the disposal of non-core businesses reduced it by a further GBP26 million. Its underlying operating profit margin declined to 22.3%, from 24.3%, as it sold a greater proportion of products to manufacturers rather than the more profitable work it does in the military and energy aftermarkets.
It reported organic revenue growth of 6% in its civil aerospace markets, offset by declines in military and energy. It returned to total organic revenue growth of 3% in the second half of the year.
Still, its order book at the end of 2014 stood at GBP1.61 billion, up from GBP1.55 billion at the end of 2013, and it said it was confident about its outlook. Signalling that confidence, it raised its final dividend by 8% to 9.50 pence, meaning its total dividend for the year was up by the same amount at 13.75p.
"The record levels of investment in R&D and new product introduction follow a very successful period of winning work on new platforms. This will drive revenue growth extending over many decades," Chief Executive Stephen Young said in a statement.
"We made excellent progress against our key strategic initiatives including deployment of the Meggitt Production System, our global continuous improvement programme which, together with a 9% increase in orders and the stronger second half revenue growth, gives us good momentum going into 2015," he added.
Separately, Meggitt said it had won a multi-million dollar contract from China's AVIC Aircraft Xi'an Branch to conduct three packages of work for the MA700 70-seat regional aircraft. The joint development phase involves two fire protection systems, one for the engine and auxiliary power unit and the other for the cargo and cabin, and a bleed air leak detection system.
First delivery is planned for 2019 with production expected to last at least 25 years, Meggitt said.
By Steve McGrath; [email protected]; @stevemcgrath1
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