Meggitt hit by downturn, FY revenues and earnings fall

Aerospace and defence group Meggitt (LSE: MGGT) was hit by the economic downturn in the year ended 31 December 2009, reporting a 1% fall in revenues to 1.15bn while pre-tax profit dropped 4% to 234m compared to 243m in 2008. At 25.3p, earnings per share (EPS) was 5% lower than the previous year.

"The group's response to the unprecedented economic conditions unfolding through 2009 has been comprehensive and successful, Meggitt chief executive Terry Twigger. According to Meggitt increased military sales and positive cross-currency trends offset the impact of the downturn in the civil aerospace revenues.

Whilst revenues and earnings fell, the company said it had improved margins, achieved a company record for cash generation and reduced net debt by 23% to 808.6m. Meggitt announced that it would be maintaining its full-year dividend.

"Our end markets developed very much as expected, although the impact of destocking was more severe than anticipated," Twigger stated. "Offsetting this, we significantly exceeded our cost reduction targets and, as a result, achieved profits close to last year's record levels. This, together with the record net cash generation of 126m underlines the robustness of Meggitt's business".

The company said that its cost reduction programme delivered better-than-expected results, with savings of 34m. It is on track to achieve or exceed itssavings run rate target of 50m by the end of 2010.

Looking ahead, Meggitt plans to change its operational structure, according to Twigger the company will organise its businesses into five capability groupings which will each manage a number of production units. The restructuring is intended to standardise processes and systems throughout the group, cutting costs and making it more responsive to customer demands. Accordingly the company believes that it will be well placed to respond to any upturn in air traffic as a result.

http://www.proactiveinvestors.co.uk/companies/news/13922/meggitt-hit-by-downturn-fy-revenues-and-earnings-fall-13922.html