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UK's Meggitt says supply snags overshadowing aerospace recovery

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By Reuters

<div> <p>By Yadarisa Shabong</p> <p> -British aircraft parts maker and takeover target Meggitt warned of lower annual revenue and profit on Thursday as supply chain problems and a weak defence market outweigh a recovery in civil aerospace.</p> <p>The company, which supplies wheel and brake systems for military fighter programmes, said raw material and labour shortages seen in the third quarter were expected to persist into the fourth.</p> <p>A soft defence market is also hurting its business, it said, as customers lowered spending and purchases of parts as they use up stock-piled items from last year.</p> <p>Those issues have clouded a recovery in its civil aerospace division, which saw revenue in the three months to September up 29%, but the reopening of transatlantic travel bodes well for the future, Chief Executive Tony Wood said in a conference call with analysts.</p> <p>Meggitt makes components for aircraft makers such as Boeing and Airbus and is one of many companies struggling with supply chain difficulties as economies reopen from <span class="caps">COVID</span>-19 lockdowns. </p> <p>Europe’s Airbus on Thursday lifted annual profit targets, but also said it was facing problems in getting parts on time.</p> <p>Wood said Meggitt was working on a day to day basis to try and mitigate supply chain disruptions, curtail lead times and look for alternatives for electronic parts.</p> <p>The company is set to be taken over by U.S. peer Parker-Hannifin in a 6.3 billion pound ($8.67 billion) deal that is expected to close in the third quarter of next year, despite a probe in Britain over national security concerns.</p> <p>Annual revenue is expected to be 5% lower on an organic basis and underlying operating profit between 170 million to 190 million pounds ($261.04 million). It reported 2020 revenue of 1.68 billion pounds and underlying operating profit of 190.5 million pounds.</p> <p>Shares in the <span class="caps">FTSE</span> 100-listed company were flat by 0832 <span class="caps">GMT</span>. </p> <p>($1 = 0.7267 pounds)</p> </div>