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Meggitt PLC MGGT

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Meggitt Lowers 2021 Guidance as Supply Chain Disruptions Bite

Joachim Kotze Equity Analyst

Analyst Note

| Joachim Kotze |

Wide-moat Meggitt is lowering its guidance for full-year 2021 as the recovery in civil aerospace is more than offset by lower-than-expected defense orders in the U.S., while global supply chain disruptions weigh on the group’s ability to deliver finished products. Revenue for 2021, which was previously guided to be flat year on year, is now expected to decline by 5%. The updated midpoint operating profit guidance of GBP 180 million is lower than 2020 operating profit of GBP 190 million, a deviation from the previously expected year-on-year increase in profitability. The group still expects to generate positive free cash flow for the full year. Meggitt is under an all-cash takeover offer from Parker-Hannifin for GBX 800 per share, which forms the basis of our GBX 800 fair value estimate as we believe the deal is highly likely to succeed.

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Company Profile

Business Description

Meggitt designs and manufactures high performance components and sub-systems for the aerospace, defense, and energy markets. Key products include aircraft wheels and brakes, fire and safety systems, sensors, fuel systems, and polymer seals. Of the EUR 1.9 billion group revenue reported in 2020, 43% is derived from civil aerospace markets, 46% from defense, and 11% from energy markets. The company commands a leading share within many of its product categories and enjoys a high level of sole-source positions on long-term civil and military programs. Activities are evenly split between production of original equipment and aftermarket services.

Ansty Business Park, Pilot Way
Coventry, CV7 9JU, United Kingdom
T +44 2476826900
Sector Industrials
Industry Aerospace & Defense
Most Recent Earnings
Fiscal Year End Dec 31, 2021
Stock Type
Employees 9,280