Meggitt Plc (MGGT), the largest provider of wheels and brakes for military aircraft, cut its sales forecast for the year as production problems affected a division and a weaker dollar hurt earnings reported in sterling.
Sales this year will grow by low single-digits, the Christchurch, England-based company said in a statement today. That compared with a previous forecast of a mid-single-digit increase. Sales should rise by a mid-single digit rate next year at constant currency, it said.
The company also took a 20 million pound ($32 million) provision to reflect a raw material supply shortage. A fix has been found, including where needed the replacement of parts in coming years. The full costs of the issue are not known, Meggitt said. Short-term production problems at Meggitt Sensing Systems contributed to underlying trading “slightly below expectations” in the period from July 1 to Oct. 31.
Bank of America cut its rating for the company to neutral from a buy after the forecast revision.
Meggitt shares advanced 50 percent this year before the profit warning, valuing the company at 4.5 billion pounds. The forecast adjustment is the first for Stephen Young who became chief executive officer six months ago after serving as finance chief.
Military revenue remained flat, the company said, despite mandatory spending cut by the U.S. government. The company’s energy business was affected by the timing of payments on some contracts, it said.
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