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Meggitt boosts annual organic revenue forecast; warns of pressured margins

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By Reuters

(Reuters) – Engineering firm Meggitt Plc <MGGT.L> on Tuesday raised its outlook for annual organic revenue growth, buoyed by a strong third-quarter performance in the U.S. defence market, but warned margins would be pressured because of Boeing’s <BA.N> grounded 737 MAX.

The company, which supplies aerospace components and wheels and brakes for military fighter programmes, said it expects full year organic revenue growth between 6% and 7%, up from an earlier view of 4% to 6%. Organic revenue in the third quarter rose 11%, with defence revenue jumping 20%.

Shares were seen rising 4% to 5%, according to traders.

However, full-year operating margins are expected to be towards the lower end of its forecast of 17.7% to 18.2% – squeezed by the grounding of the 737 MAX and pressures on its supply chain from the ramp-up of new aircraft production.

Meggitt is a key supplier to Airbus <AIR.PA> and Boeing, which earlier this year said it would cut production of its 737 MAX aircraft as it struggles with the worldwide grounding of the narrowbody jet following two fatal crashes in less than five months.

(Reporting by Yadarisa Shabong in Bengaluru; Editing by Rashmi Aich, Bernard Orr)