28th Oct 2021 10:27
(Alliance News) - Meggitt PLC on Thursday warned of a drop in annual revenue due to persisting supply chain disruption and softer defence sales hitting third quarter trading.
The news comes after Tuesday's announcement by Meggitt that the UK government had referred its takeover by the US's Parker-Hannifin Corp to the competition regulator on national security grounds. However, Meggitt said it still expects the deal to complete in the third quarter of 2022.
Supply chain issues and softer defence trends are expected to continue in the fourth quarter, Meggitt said, leading to a revised forecast for revenue to be around 5% lower than 2020 on an organic basis. The Coventry, England-based aerospace and defence firm reported 2020 revenue of GBP1.68 billion.
While underlying operating profit is expected in a range of between GBP170 million and GBP190 million, a drop from GBP191 million in 2020.
Shares in the Coventry, England-based aerospace components maker were flat in London on Thursday morning at 750.00 pence each.
Despite the guidance warning, Meggitt said trading in the third quarter reflected trends seen across end-markets earlier in the year, with revenue up 5% year-on-year and up 4% sequentially. Strong growth was generated in the firm's Civil Aftermarket, up 44% year on year and 12% sequentially.
Meggitt's Defence sector top-line performance continued to struggle, 12% lower in the quarter to extend first half trends.
"We are pleased to have delivered another period of sequential group revenue improvement. However, the trends we saw during the first half in defence have continued in the third quarter," commented Chief Executive Tony Wood.
"During the period, we have experienced the effects of the well documented global supply chain disruption. Thanks to the performance of our teams we have managed to partially mitigate this; but these headwinds, combined with lower defence revenue, have constrained group profitability," Wood added.
Looking ahead, Meggitt said that positive free cash flow is expected for the year and stated that in spite of facing headwinds in the short-term, the "underlying fundamentals of the business remain strong".
By Will Paige; [email protected]
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