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Meggitt's growth to be constrained by the coronavirus fall-out and grounding of the Boeing's 737 MAX

Sir Nigel Rudd will step down as chairman once a successor has been found

Meggitt PLC -

Aerospace company Meggitt PLC (LON:MGGT) has warned revenue growth this year will be hobbled by the Boeing 737 MAX fiasco and coronavirus-related issues.

The group said it expects to deliver organic revenue growth of 2-4% in 2020 and to increase operating margins by between three-tenths and half a percentage point.

Sector-specific factors including the production halt of the 737 MAX and supply chain disruption, as well as the wider macroeconomic impact of the coronavirus, are expected to hold back margin progression in the short-term.

Meggitt's current thinking is that these factors will fade and it is currently expecting to deliver low to mid-single-digit percentage organic revenue growth and underlying operating margins in the range of 18.5% to 19.0% in 2021.

The gloomy outlook statement was included in the company's results statement covering 2019.

Meggitt saw revenue in 2019 rise 9% to £2.28bn from £2.08bn in 2018; on a like-for-like (LFL) basis, revenue grew 8%, which was ahead of the company's recently raised guidance.

Underlying earnings (EBITDA) rose 10% to £507.3mln from £461.6mln the previous year; on a like-for-like basis, earnings were up 8%.

Underlying profit before tax was up 11% (LFL: 8%) to £370.3mln from £334.8mln while reported profit before tax, which includes what the company regards as one-off items, jumped 33% to £286.7mln from £216.1mln.

Net debt at the end of 2019 had narrowed to £911.2mln from £1.07bn a year earlier.

The full-year dividend has been nudged up to 17.5p from 16.65p.

“Our performance was underpinned by growing end-markets and strong execution across our teams during the first full year of our new customer aligned organisation. We delivered good progress on our strategic initiatives helping offset the investment made at our fast-growing advanced engine composites sites and headwinds caused by adverse mix, supply and trading environment conditions and the grounding of the Boeing 737 MAX,” said Tony Wood, the chief executive of Meggitt.

“We expect 2020 to be a year of further progress and profitable growth,” he added.

Shares in Meggitt were down 5.4% at 562.55p in early deals.

In a separate announcement, it was revealed that Sir Nigel Rudd, the chairman of Meggitt, is to step down as a director of the aerospace components maker.

Rudd is quitting to spend more time on his business and other interests and will not seek re-election to the board at next year's annual general meeting.

Quick facts: Meggitt PLC

Price: 334.0725 GBX

LSE:MGGT
Market: LSE
Market Cap: £25.45 m
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