Meggitt scraps divi as Covid airline shutdown hits aerospace unit

UK aerospace engineer Meggitt said on Tuesday scrapped its interim dividend to save cash in the teeth of the coronavirus crisis, as it slumped to a heavy half-year loss.

The aircraft parts maker posted pre-tax losses of £368m, compared with a £73m profit a year earlier due to £373.2m in impairment losses and other asset write downs related to its civil aerospace business.

Revenue fell to £916.8m from £1.07bn, but still above consensus forecasts of £906.5m.

Sales at Meggitt’s aerospace division, which serves big plane makers such as Boeing and Airbus, fell by 27% as the airline industry was battered by travel restrictions and subsequent collapse in passenger demand.

“The recovery in civil aerospace remains sensitive to spikes in Covid-19 cases, creating near term uncertainty about the pace and shape of a recovery,” the company said, adding that full year guidance remained suspended.

“For cash, as a result of a proportion of inventory reduction moving into 2021, we now expect to be broadly free cash flow neutral for the full year.”