MGGT.L Share News (MGGT)

(Alliance News) - Defence engineer Meggitt PLC has upgraded annual revenue guidance following a solid performance from core business in the first six months of the year.

For 2019, Meggitt now sees organic revenue growth at between 4% to 6%, following better-than-expected interim trading and a strong order book. Revenue in 2018 was GBP2.08 billion.

The firm is on track to achieve a margin improvement of zero to 50 basis points in 2019.

For the first half of 2019, Meggitt's revenue growth was 12%, and 9% organically, to GBP1.07 billion, with orders rising 10% reported and 7% organically to GBP1.07 billion.

Pretax profit fell 31%, however, to GBP73 million, though with the underlying figure rising 7%, and 2% organically, to GBP145 million. Underlying operating profit, Meggitt's preferred measure, rose 7% to GBP161.1 million.

The drop in statutory profit was mainly due to the non-repeat of a sale gain, and a loss on the non-cash marking to market of some financial instruments.

Meggitt has increased its interim dividend by 5%, to 5.55 pence per share, reflecting "ongoing" confidence in the firm's outlook.

"Trading in the first half was strong, with robust growth in both civil original equipment and defence and good performance in our civil aftermarket business, despite an easing in air traffic growth and lower demand for initial provisioning spares following the grounding of the 737 MAX," said Chief Executive Tony Wood.

"We continue to make good progress in the operational transformation of the group, including our centre-led approach to purchasing, footprint rationalisation programme and driving improved operational performance at our Engine Composites product group," he continued.

"We have strengthened and focused our portfolio, with further investment in priority technology areas such as thermal systems, optical sensing, fire protection and braking systems and the completion of two non-core divestments."

Meggitt, in a separate announcement Tuesday, said Philip Green, the executive director of Commercial & Corporate Affairs, will be stepping down from the board at the end of 2019.

Green has been on Meggitt's board for 18 years, and has been with the company for 25 years. There will not be a board replacement.

Chair Nigel Rudd said: "The board thanks Philip for his commitment and tremendous contribution over the past 25 years working for Meggitt, and particularly during his 18 years as a board director.

"Philip has played a significant role in the growth and development of Meggitt through his management of legal, trade compliance, commercial and other matters over the years. We wish him all the best in his retirement."

Meggitt shares were 4.5% higher in London on Tuesday morning at a price of 596.60 pence each.