Meggitt beats on first-half sales, raises full-year guidance

Meggitt delivered better than expected half-year topline growth on the back of "robust" growth in both civil original equipment and defence, guiding higher for full-year sales.

The manufacturer of flight, power and defence systems also cited a "good performance" in its civil aftermarket business as a reason for its strong performance during the half and reiterated its forecast for an improvement in its full-year margins of up to 50 basis points.

Management highlighted Megitt's continued investment in differentiated technologies, that factory consolidation and expansion activity was running ahead of plan, reduction in purchased costs sustained and additional sales of non-core units.

"We continue to make good progress in the operational transformation of the Group, including our centre-led approach to purchasing, footprint rationalisation programme and driving improved operational performance at our Engine Composites product group," said company boss Tim Wood.

"We have strengthened and focused our portfolio, with further investment in priority technology areas such as thermal systems, optical sensing, fire protection and braking systems and the completion of two non-core divestments."

For the six months ending on 30 June, the engineer posted an approximately 9.0% jump in organic revenues to reach £1,071m or of 12.0% on an as reported basis, which compared quite favourably with the 3.0% rise that analysts at UBS had penciled-in.

The above resulted in a 2.0% jump in profits before tax on an underlying basis to £145.0m, for earnings per share of 14.7p.

On a statutory basis however, fewer divestments versus a year ago meant that profits before tax declined by 31.0% to reach £73.0m.

THe firm's orders increased by 7.0% on an organic basis to £1,193.0m for a book-to-bill ratio of 1.13, alongside especially strong growth in orders from defence customers for a first half book-to-bill ratio of 1.33.

Free cash flow meanwhile improved by roughly 80.0% to £49.0m, with net borrowings 1.0% lower at £1,018m.

In terms of guidance, Meggitt raised its forecast for full-year organic revenue growth to a range of 4.0-6.0%, in comparison to a prior forecast for an increase of 3.0-5.0%, and said the outfit remained on track to deliver a margin improvement of between zero and 50 basis points.

The interim dividend was raised by 5.0% to 5.55p on the back of "the acceleration in growth and our continuing confidence in the prospects for the group."