Meggitt 2018 interim results
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:
o Completed three further divestments to focus the portfolio, with 70% of revenue now in attractive markets where Meggitt has a strong competitive position;
o Continued investment in differentiated technologies;
o Factory consolidation and expansion activity ahead of plan; work at UK Super Site now underway;
o 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.
