25th Feb 2020 08:45
(Alliance News) - Meggitt PLC said Tuesday it delivered a strong set of results in 2019, with organic revenue growth coming in ahead of its raised guidance and a good performance across all end markets, but warned of a difficult 2020.
Separately, the FTSE 100-listed aerospace parts maker said Chair Nigel Rudd is stepping down. He will remain in his role until a successor is found - with the search being led by Senior Independent Director Guy Berruyer - but will not stand for re-election at the company's 2021 annual general meeting.
Rudd has been chair since 2015 and Meggitt said he is stepping down to "spend more time" on his business and other interests.
Shares in Meggitt were down 3.4% in early trading in London on Tuesday at 574.00 pence each, the worst performer in the blue chip index.
Turning to its 2019 performance, Meggitt reported revenue of GBP2.28 billion in 2019, up 9.6% from GBP2.08 billion in 2018, lifting pretax profit 33% to GBP286.7 million from GBP216.1 million.
Orders were up 10% year-on-year in 2019 at GBP2.47 billion, which reflects a strong performance in growing end-markets. Within this, there was 8% growth in civil aerospace, 11% in defence and 10% in energy.
Chief Executive Tony Wood said: "We delivered another strong set of results in 2019, with organic revenue growth of 8%, ahead of our raised guidance, and good performance across all end markets, particularly Defence. Our performance was underpinned by growing end-markets and strong execution across our teams during the first full year of our new customer‑aligned organisation.
"We delivered good progress on our strategic initiatives helping offset the investment made at our fast growing advanced engine composites sites and headwinds caused by adverse mix, supply and trading environment conditions and the grounding of the Boeing 737 MAX, and enabling us to deliver an increase in underlying operating profit of 10% to GBP403 million."
Meggitt declared a full-year dividend of 17.50p per share, up 5.1% from 16.65p in 2018.
However, Meggitt warned warned growth in 2020 will be hindered by the halt to production of Boeing Co's 737 MAX aircraft, alongside disruption caused by coronavirus.
Looking ahead, Meggitt said "sector specific factors" including the production halt of the grounded Boeing 737 MAX and supply chain disruption, as well as the "wider macroeconomic impact" of coronavirus are expected to hold back margin progression in the short-term.
Meggitt expects 2020 organic revenue growth in a range of 2% to 4% and 2020 underlying operating margin improved by 30 to 50 basis points.
"As previously guided, we also expect the level of free cash flow to be lower as a result of: an increase in capital and operating expenditure relating to our move to Ansty Park and investment in carbon capacity; an increase in cash tax paid; and one-off property-related cash receipts in 2019," Meggitt said.
"At the current time, we expect the effect of these sector-specific and macroeconomic factors to be felt beyond 2020. Nonetheless, we expect to deliver low to mid-single digit organic revenue growth and underlying operating margins in the range of 18.5% to 19.0% in 2021," the company added.
By Paul McGowan; [email protected]
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