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Meggitt upgrades 2019 revenue forecasts as US market boosts defence business

The engineering group now expects organic revenue growth for the year of between 6% and 7%, up from previous estimates of a 4%-6%, although margins are expected to be at the lower end of guidance at around 17.7%

Meggitt PLC - Meggitt upgrades 2019 revenue forecasts as US market boosts defence business
Meggitt also upgraded revenue growth forecasts for its defence segment to 9-11% from 6-8%

Meggitt PLC (LON:MGGT) has upgraded its revenue guidance for the full year as activity in the US helped boost the performance of its defence segment.

The FTSE 100 engineering group now expects organic revenue growth for the year of between 6% and 7%, up from previous estimates of a 4%-6% rise, following third-quarter trading that it said was “stronger the previously anticipated”.

READ: Meggitt to supply the US Army in $48mln agreement

Revenues expanded by 11% in the three months, Meggitt said, with growth across all of its segments but particularly in defence and energy, where incomes rose 20% and 26% respectively.

The company said the strong performance in defence reflected its “significant platform and fleet positions” as well as upgrade and retrofit activity in the US market.

Meggitt now expects its defence segment revenues to grow by between 9% and 11% for the full year, higher than previous estimates of 6-8% growth well ahead of its other businesses.

One small snag in the forecasts was the group’s operating margin, which is expected to come in “towards the lower end” of the company’s guidance range of between 17.7-18.2% as a result of the grounding of Boeing’s 737 MAX aircraft earlier this year and pressures on the company’s supply chain due to what it said was an “unprecedented ramp up in new aircraft production”.

Despite this, the company said it was “well-positioned for the future” with exposure to “some of the fastest growing platforms and hardest working fleets across both civil aerospace and defence”.

The upgraded forecasts drove the shares 0.5% higher to 632.6p in early deals on Tuesday.

Quick facts: Meggitt PLC

Price: 670 GBX

LSE:MGGT
Market: LSE
Market Cap: £5.21 billion
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