Meggitt’s core civil aerospace, defence and energy markets share a common requirement for smart engineering for extreme environments. These mission and safety critical components and sub-systems must perform to exacting requirements for many years in highly demanding operating conditions. Suppliers must be capable of meeting rigorous certification requirements.
The environments in which many of our products operate result in high levels of wear and tear and demand for spares and repairs. This drives aftermarket revenues for decades after initial product delivery.
Civil aftermarket revenue grew organically by 8%, within which large jets grew by 10%, driven by B777, B787, A350 XWB and the A220 (formerly the Bombardier C Series), together with one-off stocking relating to distributor agreements signed in late 2017 which increased demand in the first half. Business jets also grew with revenue up 4% for the year with good growth in G350/450 and G500 platforms. Revenue in the regional jet aftermarket reflected a strong growth in traffic throughout 2018, which led to organic growth of 6%.
Overall civil aerospace revenue increased by 7% organically.
Over the medium term, production of large jets, underpinned by backlogs of up to eight years at current production rates, is expected to grow as airlines seek to increase capacity to support anticipated traffic growth. Our increased shipset content on the latest generation of aircraft supports a positive outlook for civil OE revenues. In 2019, we expect civil OE to grow organically by 5 to 7%.
Civil aftermarket revenues will continue to benefit from above average growth in traffic and the record low retirement rate in 2018. However, this growth will be partly offset by lower anticipated utilisation of both business jets and regional aircraft which account for 46% of Group aftermarket exposures; and a strong comparative period in 2018, in which aftermarket growth was supplemented by non-recurring revenue associated with new distributor agreements signed in late 2017. In 2019, we expect civil aftermarket to grow organically by 3 to 5%.
Our defence business is well positioned with significant exposure to the US Department of Defense and good content on all of the fastest growing and hardest worked platforms. We continue to benefit from the trend to invest in improving fleet readiness and in 2019, we anticipate organic growth to increase by 6 to 8%.
The outlook in our energy markets is mixed. At Heatric we expect the recovery to continue into 2019 given organic order growth of 24% in 2018. This is likely to be offset by more challenging conditions in the Group’s power generation exposures where we continue to offset falling demand from the industrial gas turbine OEMs with growth in sales to end users.
In 2019, we expect organic energy growth of 0 to 5%.