Meggitt says FY operating margins to be at lower end of guidance
By Frank Prenesti
Date: Tuesday 12 Nov 2019
(Sharecast News) - Aerospace engineer Meggitt upgraded its full year revenue forecasts but said operating margins would be at the lower end of guidance due to the Boeing 737MAX groundings and supply chain pressure as aircraft production increased.
The company on Tuesday reported a stronger than anticipated third quarter trading performance and despite being held back by the 737MAX issue.
Third quarter revenue grew 11%, driven by all end market segments, particularly its defence unit. Full year revenue growth guidance was lifted to 6 - 7% from 4 - 6%.
Civil Aftermarket revenues grew by 4% in the third quarter, where Meggitt delivered "good growth in large jets against a backdrop of lower air traffic growth and ongoing delays in the delivery of initial provisioning spares for the 737MAX".
In defence, revenues grew by 20% in the third quarter, with strong growth in both original equipment and aftermarket operations.
The group now expected full year defence organic revenue growth of 9 - 11%, up from previous guidance of 6 - 8%).
Operating margin would be at the lower end of Meggitt's 17.7 - 18.2% guidance due to the 737MAX and pressures across its internal and external supply chain driven by the "unprecedented ramp up in new aircraft production".
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