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Meggitt reports full-year EPS more than doubles, free cash flow jumps
Meggitt saw earnings per share more than double in 2017, with the engineer continuing to execute against its targets for improved cash and margins over the medium-term and helped by recently enacted tax cuts in the States and a tailwind from FX.
"2017 trading was in line with our expectations with the stronger second half contributing to good organic growth across the Group [...] we have made further progress on our operational improvement priorities which underpin our medium term targets for cash and margin improvement," group chief Tony Wood said in a statement.
For the twelve months ending on 31 December, Meggitt posted a 42% jump in free cash flows to £186m, which it credited to an increased focus on managing its inventory, which allowed it to release £16m of cash, alongside a 34% increase in statutory profits to £262.4m, with EPS rocketing 105% to 45.2p.
However, in underlying terms, the company's EPS was higher by a more pedestrian 1% to 35.3p a share and PBT by 2% to £357.9m, as sales edged ahead by the same measure to £2.03bn.
In fact, in underlying terms, organic profits before tax were 1% lower, at £357.9m.
Offsetting that, the company recorded an exceptional £123m gain as its deferred US tax net liabilities gained in value following the recent approval of corporate tax cuts in the States.
Meggitt's bottom line also benefited from marking-to-market some of its financial instruments, mainly currency hedges, and from asset sales, offset by the costs associated with the cancellation of Dassault's Falcon 5X.
Top line growth was muted overall, with organic sales (including exceptionals and at current exchange rates) up 2% to £2.027bn, with an increase of 4% in revenues on on the civil aerospace part of the business and a 1% rise in military sales offset by weakness in its energy arm.
The company's net debt position on the other hand improved, declining 18% to £964.8m, while the company's full-year payout was increased 5% to 15.85p.
On the back of its recent moves to rationalise its manufacturing base, divestments in the pipeline, and recent contract wins, the company said growth was set to accelerate over the medium-term - hence its raised dividend.