The FTSE 100 engineer, which supplies parts to customers including Airbus and Boeing, cut its outlook for next year as it continues to feel the impact of US military budget cuts.
The group said it now expected organic revenue growth in the low to mid-single digits in 2015, down from its previous forecast of mid-single digit growth.
The latest downgrade comes just four months after Meggitt cut its full-year 2014 revenue guidance to low single-digit growth, from mid-single digits, after military revenues plummeted as much as 22 per cent in the first half of the year.
Meggitt became the latest defence company to warn about the challenge of shrinking government orders. Rolls-Royce, which on Tuesday announced 2,600 job cuts, is also feeling the effects of weaker military spending, with revenues and profit expected to be flat for the first time in a decade.
However, Meggitt’s shares rose 5 per cent in early trading in London on Wednesday to 463p, the second-highest riser on the FTSE, as investors responded positively to the share buyback.
Ben Bourne, analyst at Liberum, said Meggitt’s share buyback goes some way to restore confidence in the investment case. “But people will inevitably still be concerned by underlying trading.”
Rami Myerson, analyst at Investec, said the buyback was an “encouraging indication that management is focused on capital discipline and improving core businesses that have disappointed recently, rather than chasing the next large acquisition”.
The group on Wednesday reported third-quarter organic revenue growth of 5 per cent, driven by an 18 per cent rise in civil aerospace original equipment orders. Reported revenue fell 2 per cent because of the effects of foreign exchange.
Military revenues recovered in the third quarter, rising 5 per cent. However, energy sales were down 7 per cent as the group continues to grapple with problems at its Brazilian product provider.
“In energy, we do not yet have full clarity on the impact of the financial difficulties being experienced by our Brazilian local content provider, but based on current projections we assume a further $10m of revenue will be delayed from 2014 into 2015,” the company said in a statement.
Before today’s upswing, Meggitt’s shares had fallen 11 per cent in a year.
Additional reporting by Claer Barrett
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