Meggitt’s revenue tanks 14% in fiscal H1 due to COVID-19 restrictions

Meggitt plc (LON: MGGT) said on Tuesday that its profit in the fiscal first half came in 37% lower on an annualised basis, attributed to the Coronavirus pandemic that brought air travel to a near halt in recent months and consequently weighed heavily on its business.

The company also said that its board had decided in favour of suspending the interim dividend to cushion the economic blow from COVID-19. In comparison, it had paid 5.55 pence a share of interim dividend last year. Meggitt was reported in August to have inked an agreement to supply heat exchangers to Equinor.

Civil aerospace business reports a 27% decline in sales

Its civil aerospace business, Meggitt added on Tuesday, saw a 27% decline in sales in the first six months of the current fiscal year. The British company is a prominent supplier for both of the world’s largest aeroplane manufacturers, Airbus SE and the Boeing Company.

Meggitt’s defence business, on the other hand, reported a 7% growth in organic sales in H1 on the back of strong demand from the United States. The segment made up 43% of Meggitt’s total sales in the fiscal first half.

At £102 million, the British company’s underlying operating profit in the six months that concluded in June was lower than last year. Its overall revenue also reported a 14% decline on a year over year basis to £917 million. In the first week of July, Meggitt had warned of a 15% decline in H1 organic revenue.

In a previous announcement in April, Meggitt had expressed plans of slashing its workforce by roughly 1,800 jobs. The cost-cut, as per the FTSE 250 listed firm, will result in up to £450 million of cash savings.

Meggitt’s performance in the stock market

Shares of the company opened more than 1.5% up on Tuesday. Meggitt, however, closed the regular session about 4% down. Including the price action, the stock is now trading at 290 pence per share versus a year to date to low of 217 pence per share in the first week of April. At the start of the year, Meggitt plc was trading at a significantly higher 655 pence per share.

Its performance in the stock market also remained hawkish last year with an annual gain of more than 40%. At the time of writing, Meggitt is valued at £2.25 billion and has a price to earnings ratio of 10.09.