10th Nov 2020 10:07
(Alliance News) -Â Meggitt PLC on Tuesday said its top-line performance improved in the third quarter, though margins narrowed.
Shares in the aerospace and defence company were up 7.5% at 403.50 pence in London on Tuesday.
Revenue in the third quarter amounted to GBP384 million, down 25% on an organic basis.
Chief Executive Tony Wood noted: "While conditions in the global civil aerospace sector remained weak during the third quarter, our top line performance slightly improved, with revenue down 25% in the period, compared with down 30% in the second quarter, reflecting the breadth of our end markets and the continued strong performance of our defence business and growth in energy."
Meggitt said it was a continued strong performance from its defence operations in the quarter, with organic growth of 9%. Conditions in its core US market remained positive, it noted.
Civil aerospace revenue was 49% lower than the comparative period on an organic basis, while energy revenue grew 4%.
While Meggitt said its top-line performance was broadly in line with expectations in the third quarter, margins were lower, particularly at the end of the period.
"This was driven by adverse mix within civil aftermarket, as airlines deferred spares purchases through pro-active management of their fleets to preserve cash, and the consequent lower volumes across our manufacturing sites," said Meggitt.
The company said trends across its end markets continued in October, with group performance "slightly lower" than base case, which assumed a progressive improvement in the fourth quarter.
"Although expectations of the extent of the recovery in civil aerospace in the important final quarter have softened in recent weeks, our global teams continue to focus on actions within our control, including our cost and cash actions where we have made strong progress," said CEO Wood.
For the full-year, Meggitt is expecting underlying operating profit to be between GBP180 million and GBP200 million. Underlying operating profit for 2019 was GBP402.9 million, so Meggitt is expecting this to at least halve.
The company continues to expect to deliver positive free cash in the second half and to be free cash flow neutral for the full-year at the top end of its underlying operating profit guidance range.
"While we remain alive to the challenges which Covid-19 continues to pose, we are encouraged by recent news on vaccine development and the positive implications for air travel," Meggitt said.
By Lucy Heming;Â [email protected]
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