Shares in British engineer Meggitt slide as results disappoint
LONDON (Reuters) - Shares in Meggitt (MGGT.L) fell more than 6 percent on Tuesday after 2017 results and outlook missed analyst forecasts, although the British engineer said the performance of its military and energy businesses would improve in 2018.
The maker of parts for vehicles, aircraft and the energy industry said it expected U.S. defence spending plans to help offset the impact of budgetary pressure in Britain.
Chief executive Tony Wood said performance in the second-half of 2017 was better than the first half, and 2018 would deliver further improvements.
"There were still challenges last year in our energy business ... but looking forwards, we're starting to see a better outlook," Wood told Reuters, describing prospects for the military business as "generally good".
Organic revenue growth in military was 1 percent, with Meggitt saying the order intake in the sector was good. Civil aerospace saw a 4 percent rise in organic revenue growth.
But the firm's energy business was a drag in 2017, with organic revenue dropping 8 percent.
Meggitt provides valves and monitoring equipment for power generators, as well as equipment to the oil and gas market.
The firm said there had been lower demand for industrial gas turbines but said order growth of 13 percent suggested an improving outlook for the energy business.
Analysts at Investec said operating profit of 388.4 million pounds was just below consensus expectations "but not as bad as we think some investors had anticipated." It also said free-cash flow was better than expected.
Shares were down 6.1 percent by 1223 GMT.
Meggitt said its outlook for organic revenue growth in 2018 was 2 to 4 percent, after it said its 2017 performance was in line with its expectations.
Deutsche Bank said the outlook implied a range for underlying operating profit in 2018 of 331 million to 344 million pounds.
Analysts said the outlook for underlying operating profit was 18 percent below consensus, but added that this was not a surprise given the adoption of new accounting procedures.
(Reporting by Alistair Smout; Editing by Edmund Blair)
