Meggitt's H1 profit drops but interim divi lifted, guidance confirmed

Defence and aerospace engineer Meggitt reported a drop in first-half pre-tax profit but lifted its interim dividend and confirmed its guidance for 2016.

For the six months to the end of June, statutory pre-tax profit fell 60% to £46.6m as revenue slipped 2% to £882.9m. The company said the statutory results were hit by £50.8m negative mark to market of its financial instruments, mostly as a result of the recent weakness in sterling following the Brexit vote.

Statutory operating profit was 51% lower than the first half of last year at £63m.

On an underlying basis, pre-tax profit was flat at £152m while operating profit nudged up 2% to £163.3m.

The company declared an interim dividend of 4.8p per share, up from 4.6p in 2015.

Chief executive Stephen Young said: "First half results reflect a period of strong order intake, supportive of our guidance for the full year. Organic revenue was in line with expectations, with reported revenue helped by favourable foreign currency movements and a full six-month benefit from the two composites acquisitions completed in late 2015. These businesses are trading in line with our business plan, and the integration activities under way will deliver the synergies set out at the time of acquisition.

"I am encouraged by the progress being made by our recently launched Customer Services and Support organisation. It's early days, but implementation is tracking in line with expectations and we are excited by the potential for the business in the coming years. MPS continues to make excellent progress, enhancing product quality and customer service."

Meggitt said it continues to expect civil original equipment to grow organically in the low to mid-single digit percentage range in 2016 and for the composites acquisitions to add a further 20 percentage points of growth.