Meggitt lost almost a quarter of its market value after the FTSE 100 engineer warned annual profit would be well below forecasts and that it would cut about 300 jobs.
Shares in the maker of parts for the aerospace, military and energy industries tumbled by 24% after a grim trading update, wiping more than £800m off the company’s value.
The Bournemouth-based company, which employs about 10,500 people worldwide, said revenues fell 1% in the third quarter of the year because of a sharp drop-off in business during September.
Lack of demand for aircraft parts meant sales at Meggitt’s civil aviation arm, which makes up almost half group revenues, were flat. Revenues from the defence industry, accounting for a third of sales, fell 2%. Sales to the energy industry, which make up a tenth of group income, dropped 16% as demand for equipment for oil rigs fell away.
The company said: “These factors are expected to persist through the fourth quarter, which will result in underlying operating profit for the year being meaningfully below the current company-compiled consensus estimate of £369m.
“In response to current trading conditions, we have expanded our cost reduction activity and are assessing options to reduce our global employee base by approximately 300.”
Analysts at the stockbroker Investec said weak trading appeared to have spread throughout the energy business. They took the profit warning to mean group profit would be about 10% less than expected this year with a bigger hit next year.
Meggitt’s surprise update follows a string of profit warnings from companies such as Pearson, the educational publisher, Argos owner Home Retail Group and Chemring, the military equipment maker, this month.
Britain’s manufacturers have suffered waning demand at home and abroad as global growth falters and China’s economy slows. The steep fall in the oil price has hit companies supplying the energy sector such as Rolls-Royce, which warned on profits in July.
Meggitt’s warning marks an abrupt change in its fortunes. In August, the company was upbeat as it reported a 6% rise in first-half profit with higher military spending making up for weaker trading at the energy business.
Debt will be higher relative to earnings as a result of the profit shortfall, the company said.
