Meggitt ups full-year revenue guidance, announces divisional restructure

Engineer Meggitt upped its revenue guidance for the year on Monday following a stronger-than-expected second quarter as it announced a divisional restructure.

Following good growth across its civil aftermarket, military and energy market segments, Meggitt now expects total organic revenue growth in 2018 of 4% to 6%, up from previous guidance of 2% to 4%.

Meanwhile, a slower-than-expected recovery at the company’s polymers and composites business in the first half means it now expects operating margins to be towards the lower end of the guidance range of 17.7% to 18.0%.

For its civil aftermarket business, it now expects full-year organic revenue growth of 4% to 6% compared to previous guidance of 3% to 5%. It said a strong performance in customer services and support has been accelerated by strong growth in air traffic and low levels of aircraft retirements which have increased demand for its spare parts.

As far as the military division is concerned, strong order book momentum has continued and been translated into revenue growth, with particular strength in demand for training equipment and retrofit fuel tanks for the F/A-18. As a result, the company upped its full year organic revenue growth guidance to between 6% and 8% from between 3% and 5%.

For the energy business, it now expects organic revenue growth for the year in excess of 5%, up from 0 to 5%, thanks to increased confidence in the recovery at Heatric.

Meggitt also announced divisional changes. With effect from 1 January 2019, the current structure of capability-based business units will be replaced by four customer-focused divisions.

The airframe systems division will bring together the group's capabilities which serve the world's leading commercial, business and military aircraft manufacturers, while the engine systems unit will aggregate Meggitt’s offering to aero-engine manufacturers including flow control, thermal management, sensors and engine composites.

The energy and equipment division will encompass Meggitt’s niche positions in selected energy markets, together with its training systems and defence systems capabilities, while the services and support division, - formerly customer services & support - will continue to provide a full range of spare parts distribution, maintenance, repair and overhaul (MRO) services to support its aftermarket customers.

Chief executive Tony Wood said: “The reorganisation of the group into four customer-focused divisions that we are announcing today provides an opportunity to accelerate growth and better leverage the operational benefits of our continued transition from a holding company to an integrated aerospace, defence and selected energy market group.”

At 0825 BST, the shares were up 2.4% to 505.20p.