Meggitt drops on US warning

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The Independent Online
Shares in Meggitt, the aerospace and electronics group, fell 12.5p to 64.5p after a warning that problems at its US operation would mean profits below expectations.

The company said full-year profits, due in March, would be no more than £15m, although it would maintain its final dividend at 2.63p per share.

In September analysts downgraded profit forecasts from £25m to £18m after Meggitt reported a fall in interim profits and warned of weak aerospace markets.

Nigel McCorkell, managing director, said that management at the company's troubled US plastic fabricating division had been replaced and the hope was for better trading in 1995.

However, the disruption to the business and the subsequent loss of orders meant that the operation was unlikely to return to profit in the next year.

Meggitt would have to take a "significant write-off'' in the second half, but, as the company's problems were confined to one operation, it could justify maintaining the dividend.

During the second half the rest of the group had traded in line with expectations, and electronics continued to be the bright spot, the company said. Immediate prospects within the aerospace sector remained uncertain but there had been a recent improvement in industrial markets, Mr McCorkell said.

Cuts in civil aerospace programmes have hit volumes and put pressure on Meggitt's margins, and the company is still facing weak trading in its key German market.