A 737 Max aircraft is pictured at the Boeing factory in Renton, Washington March 27, 2019. — Reuters pic
LONDON, Feb 25 — British engineer Meggitt warned that growth in 2020 and 2021 would be constrained by the halt to production of Boeing’s 737 MAX aircraft and the economic impact of Covid-19.
The company said that organic revenue growth in 2020 would come in at between two per cent and four per cent, and for 2021 it guided that the measure would grow in the range of low to mid-single digits, holding back improvement in its profit margin in the short-term.
Those forecasts mean future growth will be lower than last year. For 2019, Meggitt today posted an eight per cent rise in organic revenue growth, helping drive underlying operating profit up by 10 per cent to £402.8 million pounds (RM2.2 billion).
Meggitt supplies the 737 MAX with parts including a fire protection system for the engine and auxiliary power units. It also makes wheels, brakes and flight deck instruments for other commercial and military aircraft.
The 737 MAX was grounded almost a year ago after two crashes killed 346 people, and Boeing halted production of the jet earlier in 2020.
Meggitt said in its statement today that the issues at Boeing plus the impact of the rapid spread of the Covid-19 virus, or coronavirus, across Asia and beyond, would affect its future growth.
“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,” the company said.
The virus is likely to soften global air traffic growth, the company said, which hurts its business supplying parts and services to existing, rather than new jets, plus the virus is disrupting the supply chains of parts.
Despite the outlook, Meggitt said it was increasing its full-year dividend by five per cent to 17.5 pence.
Separately, the company said its chairman Nigel Rudd intended to leave his role once a successor had been appointed. — Reuters
