Aerospace firm Meggitt yesterday posted a 37 per cent rise in underlying profits after its recently acquired Dunlop Aerospace operations in the West Midlands boosted performance.
Chief executive Terry Twigger said Dunlop, which has plants in Birmingham and Coventry, was contributing to sales and profits and other changes, including its new China facility, were on track.
"We are very pleased with the Dunlop acquisition and its integration is going well. We look forward to continued progress in the second half," Mr Twigger said.
In its first interim report using International Financial Reporting Standards (IFRS), Meggitt said underlying pretax profit rose by 37 per cent to £55.2 million from a restated £40.4 million a year earlier. At constant exchange rates, underlying profit rose 43 per cent.
Underlying operating profit increased to £61.8 million from £44.5 million. This was after a £2.5 million adverse currency effect and a £16.6 million benefit from acquisitions made in 2004. Excluding those two items, the underlying operating profit increase was seven per cent.
Sales rose 44 per cent to £ 296 . 1 million from £205.6 million.
Converting overseas sales to sterling at less favourable exchange rates than 2004 hit sales £5.2 million. At constant exchange rates, sales rose by 47 per cent.
Meggitt said acquisitions made in 2004 contributed £74.2 million. Excluding that and the adverse impact of currency, group sales increased by 11 per cent.
Dunlop, whose products include aircraft wheels, brakes, seals and engine coolers, contributed £15.9 million in underlying profit on revenues of £68.8 million.
"We are on track to achieve our target of £7 million integration benefits in 2005," the company said regarding Dunlop, whose assets it bought in August 2004.
Mr Twigger also said Meggitt's new electronics plant in Xiamen, China, had taken on work formerly done in the US Virgin Islands and that more work would head there in early 2006.
Meggitt said it planned to raise its interim dividend to 2.4 pence from 2.2p a year ago.
Meggitt's biggest customer is the US Department of Defence but it also supplies components such as brakes to top planemakers Airbus and Boeing.
Mr Twigger said a strike by Boeing unionised machinists would not have a large effect on Meggitt. "Our major markets of aerospace and defence continue to look good with positive statements from original equipment manufacturers and aftermarket suppliers," the company said.
Both Airbus and Boeing expect plane deliveries to rise this year.
Meggitt's performance brought praise from analysts. "Overall, a good set of numbers," Deutsche Bank said.
The group's pre-tax profit and earnings per share were three to 3.5 per cent ahead of forecasts and the aerospace division was even stronger than expected, Deutsche Bank added.
However, Meggitt's electronics division had a tougher time, with numbers coming in under analysts' expectations.
Profits dropped to £4.4 million from £6.7 million, Merrill Lynch noted. And although some recovery is expected in the division, the group cautioned it would be on a par with the first half of the year, UBS said.