Military spending drives Meggitt

AEROSPACE group Meggitt made a net profit of £2.5m in the first half of the year after taking a £13.3m loss on the disposal of its Petroleum Systems division.

Operating profits at £29.6m were slightly up compared with the same period last year and revenue at the aerospace division, driven by higher defence spending, was 3% higher at £152.1m.

But overall revenue declined to £190.9m from the £195.9m made in the same period last year. Acquisitions led to a 30% increase in turnover at Meggitt Aerospace Systems.

The company said that despite the adverse effects of the Sars epidemic in the Far East and the war in Iraq on airline capacity, demand for civil after market products in the first half was similar to demand in the last half of 2002.

However, Meggitt's growth continues to come from defence, with military revenue now accounting for 39% of total turnover, up from 33% last time and overtaking civil aerospace sales for the first time.

Civil aerospace sales now account for 37% of revenue. Meggitt won several new contracts in the half, including a deal with the Danish air force and army to supply targets.

The company anticipates continuing strong demand for military products but it sees a slow recovery on the civil side. Meggitt chief Terry Twigger said he expected to see continued growth due to military markets.

'With acquisitions performing as anticipated and planned cost savings being realised Meggitt is on track to meet expectations in 2003,' he said.