Meggitt (LON:MGGT) has had a turbulent few years with numerous profit warnings and no organic growth since FY13. FY16 looks to be the start of the turnaround, with the recent Q3 trading statement indicating the company is on course to meet guidance for low single-digit organic revenue expansion this year. However, the company has some way to go to restore investor confidence. It was also announced that Rolls-Royce (LON:RR) veteran Tony Wood is joining as COO, a boost to the Meggitt management team.
A return to organic growth
Meggitt’s Q3 trading statement on 15 November made much better reading than the same statement this time last year, when it delivered a shock profit warning. Q316 revenue grew 6% organically (28% reported benefiting from both M&A and increasingly favourable foreign exchange) compared to -1% in Q315, although direct comparisons year-on-year are complicated by the fact there were five extra trading days in Q316. The trading day issue obviously does not affect the full year and after -2% organic growth in H115, the Q316 numbers show demonstrable progress towards guidance of low single-digit organic growth, in what management has said will be a second-half weighted year.
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