Meggitt profits crash 11% but return to growth expected in 2015

24th Feb 2015 08:11

Revenues fell 5% and profits 11% at Meggitt last year but the FTSE 100 aerospace parts supplier expects to return to growth in 2015 as its military market becomes more benign.2014 saw group revenue decline 5% to £1.55bn, mostly from currency headwinds, though organic growth was still marginally negative as organic revenue growth of 6% in civil aerospace was offset by declines in military and energy.Underlying profit before tax fell 13% to £328.7m, but even ignoring the impact of currencies, disposals or acquisitions there was still a 11% fall, with underlying earnings per share down 14% to 32.4p.The final dividend has been hiked 8% to 9.50p, resulting in full-year dividend rising 8% to 13.75p.Chief executive Stephen Young said the group expected organic revenue growth in 2015 of low to mid-single digit percentage points, in line with guidance given in November.The group expects civil aftermarket growth in mid-single digits for 2015, though growth in large jet deliveries is expected to below the long-term trend rate of traffic growth in the next year or so.In military, Young said the market looked "to be entering a more benign phase with military budgets seeing lower rates of decline than in recent years and even some suggestion of growth in the all-important US budget from 2016", with President Barak Obama's recent budget requesting an 8% increase.However, management have cautously continued to expect an average of 2% growth per annum excluding the effects of possible US budget sequestration for 2016.The energy businesses, driven by heightened demand for printed circuit heat exchangers and increasing market share in condition-monitoring equipment, should continue to deliver revenue growth averaging greater than 10% over the medium term."However, in 2015 we expect good organic growth in energy control valves and condition monitoring will be largely offset by a decline at Heatric reflecting the impact of capital expenditure deferrals by our major oil and gas customers."