Engineer Meggitt reported a slump in full-year profit on Thursday as it took a hit from the pandemic, and said it would not be recommending a dividend for 2020.
In the year to the end of December 2020, underlying pre-tax profit fell 57% to £159.5m on revenue of £1.68bn, down from £2.28bn in 2019. On a statutory basis, the company swung to a pre-tax loss of £334m from a profit of £286.7m. Its defence segment was a bright spot, however, with revenue there up 4%.
Meggitt said its performance “reflects the impact of Covid-19 on the civil caerospae sector”, after the outbreak of Covid-19 and subsequent lockdowns caused a significant reduction in commercial air traffic.
Having paid a 5.55p a share dividend in 2019, the company said it would not be recommending a final dividend for 2020 “in light of ongoing challenging and uncertain market conditions”.
Meggitt said that while the vaccine rollout is expected to ease lockdowns and drive a gradual increase in air traffic activity, it expects the trends seen in civil aerospace during the second half to continue in the first half of 2021, with recovery weighted more towards the second half of the year.
Conditions in its defence and energy end markets are expected to remain robust in 2021. Assuming no further lockdown-related disruption during the year, it expects to generate revenue in 2021 broadly in line with the previous year; an increase in underlying operating profit; and positive free cash flow.
Chief executive Tony Wood said: “Faced with a reduction in activity and demand in one of our core markets, we acted fast, executed well operationally and took decisive action while positioning the group for the recovery in civil aerospace. While our full year performance has clearly been impacted by the ongoing effects of Covid-19, it also reflects the resilience and diverse nature of the group, including the mitigating impact of our defence and energy businesses.
“The roll-out of vaccines, coupled with significant pent-up demand to travel, provides a supportive backdrop for the recovery in civil aerospace in 2021, although this positive development is likely to take time to feed through into growth in global flight activity and the aftermarket.”