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Home/News/2018 Interim results

2018 Interim results

Strong H1; well positioned to deliver upgraded full year guidance

Meggitt PLC (“Meggitt” or “the Group”), a leading international engineering company specialising in high performance components and sub-systems for the aerospace, defence and energy markets, today announces unaudited interim results for the six months ended 30 June 2018.

Group headlines

£m H1 2018 H1 20171 Change
Reported Organic2
Orders   1,087.2 968.3 12% 24%
Revenue   952.2 965.4 (1%) 9%
Underlying3          
  EBITDA4 197.3 202.6 (3%) 3%
  Operating profit 150.8 161.4 (7%) (2%)
  Profit before tax 136.1 143.1 (5%) (1%)
  Earnings per share (p) 13.9 14.2 (2%)  
Statutory          
  Operating profit 123.8 196.3 (37%)  
  Profit before tax 105.2 172.2 (39%)  
  Earnings per share (p) 11.7 19.6 (40%)  
Free cash flow   27.1 22.8 19%  
Net borrowings5   1,032.3 1,115.9 (7%)  
Dividend (p)   5.30 5.05 5%  
  • Organic revenue growth of 9% reflects strong trading performance in civil aftermarket, military and energy. Reported revenue declined by 1% due to currency and non-core divestments.
  • Full year organic revenue growth forecast raised (on 2 July) to 4 to 6% following better than anticipated trading in H1 and strong order intake with organic book to bill of 1.13x.
  • Underlying operating profit declined organically by 2% to £150.8m, within which underlying operating profit at Meggitt Polymers & Composites („MPC‟) was £2.3m (June 2017 as restated: £21.9m). Excluding MPC, underlying operating profit was up 7% (170 basis point margin improvement).
  • Statutory operating profit declined by 37% as a result of lower gains from disposals and non-cash mark to market of our financial instruments, compared to the prior period.
  • Free cash flow increased by 19% to £27.1m (June 2017 as restated: £22.8m) resulting in net borrowings:EBITDA on a covenant basis of 1.9x (June 2017: 2.2x).
  • Strong progress on key strategic initiatives:
    • Completed three further divestments to focus the portfolio, with 70% of revenue now in attractive markets where Meggitt has a strong competitive position;
    • Continued investment in differentiated technologies;
    • Factory consolidation and expansion activity ahead of plan; work at UK Super Site now underway;
    • Moving to a customer-aligned divisional structure from January 2019 in order to accelerate organic growth and realise the operational benefits of our continued journey to becoming an integrated Group.
  • Interim dividend up 5% to 5.3p reflecting our continued confidence in the prospects for the Group.

1 Restated for IFRS 9 / 15 / 16.
2 Organic numbers exclude the impact of acquisitions, disposals and foreign exchange.
3 Underlying profit and EPS are used by the Board to measure the trading performance of the Group as set out in notes 4 and 9.
4 Underlying EBITDA represents underlying operating profit adjusted to add back depreciation, amortisation and impairment losses.
5 Net borrowings represent net debt adjusted to exclude lease liabilities.

Tony Wood, Chief Executive, commented:

“Trading in the first half was strong, with organic growth accelerating across our civil aftermarket, military and energy end markets. As a result, in July we increased our full year revenue growth guidance to 4 to 6%.
Good progress has been made in the ongoing execution of our strategy in the first half. We have continued to sharpen the strategic focus of our portfolio and taken further steps in the delivery of our operational transformation. Relationships with our key customers are expanding and we have announced our intention to move to a customer-aligned organisation structure from 2019. These steps will further accelerate our transition to an integrated aerospace, defence and selected energy Group.

As previously indicated, elevated costs at Meggitt Polymers & Composites („MPC‟) mean that we expect full year operating margins to be towards the lower end of our 17.7 to 18.0% guidance range. We remain focused on delivering further operational improvements at MPC and expect financial recovery to build through the second half and into 2019.
Looking forward, we remain well placed to deliver our 2021 targets to achieve an underlying operating margin of at least 19.9% and to deliver £200m of cash from increasing inventory turns from 2.3x to 4.0x.
The acceleration in growth and our continuing confidence in the prospects for the Group, underpins our interim dividend increase of 5% to 5.3p.”

ENDS


Enquiries

Meggitt PLC

Tony Wood, Chief Executive
Doug Webb, Chief Financial Officer
Adrian Bunn, Vice President, Strategy & Investor Relations
Tel: +44 1202 597597

FTI Consulting

Deborah Scott, Senior Managing Director
Nick Hasell, Managing Director
Tel: +44 203 727 1340

About Meggitt PLC

Headquartered in the United Kingdom, this international group operates in North America, Europe and Asia. Known for its specialised extreme environment engineering, Meggitt is a world leader in aerospace, defence and energy. Meggitt employs more than 11,000 people at over 40 manufacturing facilities and regional offices worldwide.


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