Aerospace and defence engineer Meggitt PLC (LON:MGGT) has raised its revenue guidance for the year after better-than-expected third quarter trading.
The group now expects full-year organic revenue growth of 7% to 8%, compared to its previous estimate of 4% to 6%. However, operating margins are expected to be towards the lower end of its guidance range of 17.7% to 18.0%.
In the third quarter, organic revenue rose 6%, driven by a strong performance in the civil aerospace and defence divisions.
Civil aerospace and original equipment (OE) revenues increased 5% in the quarter on the back of rising demand for business jets and new large jets. For the year, organic revenues in the business are projected to increase 6% to 8%, up from an earlier forecast of 2% to 4%, as the company predicts continued growth in deliveries of new aircraft.
Civil aftermarket revenue gained 9% in the quarter, supported by growth in air traffic and low levels of aircraft retirements pushing up demand for the company’s spare parts.
The company lifted its guidance for full-year organic revenue growth in the civil aftermarket to 7% to 9% from 4% to 6%.
The defence arm delivered revenue growth of 8% for the quarter thanks to continued demand for retrofit fuel tanks.
READ: Meggitt sees spare parts contract for US defence logistics agency renewed
Meggitt said US President Donald Trump’s defence budget for 2019 provides a positive outlook for the division and it now expects annual organic revenue growth of 7% to 9%, up from its previous guidance of 6% to 8%.
The one weak spot for the firm in the third quarter was its energy business, which saw revenue fall 9% due to declines in power generation OE and Heatric, which makes diffusion bonded heat exchangers. But the company continues to see full-year organic revenue growth exceeding 5% in its energy markets.