Engineering firm Meggitt warns of hit from Boeing crisis and coronavirus
Meggitt shares take a hit as the group says its sales growth will be limited this year as it battles challenges on several fronts.
Tuesday 25 February 2020 18:13, UK
A FTSE 100 engineering firm has warned that the Boeing 737 MAX and coronavirus crises will knock sales this year, sending its shares down.
Meggitt, whose interests include ammunition handling systems to aerospace components, said it expected revenue growth to fall to between 2% and 4% in 2020.
The Bournemouth-based company told investors: "Sector-specific factors including the production halt of the 737 MAX and supply chain disruption, as well as the wider macroeconomic impact of COVID-19, are expected to hold back margin progression in the short-term."
Meggitt added that sales growth would likely be in the mid-single digits the following year.
The firm said that the coronavirus was likely to soften global air traffic growth, hurting its business supplying parts and services to existing, rather than new jets.
The company also cited supply chain disruption from efforts to control the spread.
Meggitt supplies the 737 MAX with parts including a fire protection system for the engine and auxiliary power units.
The global fleet was grounded almost a year ago after two crashes killed 346 people.
Boeing later halted production of the passenger jet as the plane continues to await regulatory clearance to fly again.
It has been undergoing a series of modifications to its flight control systems - especially anti-stall software.
Meggitt's revenue warning took the gloss off its annual results for investors as shares fell 5%.
Its 2019 figures showed an 8% rise in revenues - helping profits rise by 10% to £402.8m.
Meggitt also announced that chairman Sir Nigel Rudd would step down ahead of its 2021 AGM.