Meggitt PLC (LON:MGGT), a leading international engineering company specialising in high performance components and sub-systems for the aerospace, defence and selected energy markets, has today provided an update on trading and its financing and liquidity position.
Background
In light of the outbreak of the Covid-19 pandemic and its impact on the global economy and the wider aerospace sector, our focus in recent weeks has been on ensuring the safety of our employees and the continuity of our operating businesses worldwide.
Meggitt employs over 12,000 people globally across 42 sites and 10 countries. In providing guidance and advice to our employees, we continue to follow World Health Organisation guidelines supplemented by input from the local authorities in the regions in which we operate. We continue to review and update our advice on a daily basis as the situation develops.
Year-to-date trading
Despite a rapidly changing external environment, trading in January and February was in line with our expectations. Details of our trading performance in the first quarter of 2020 will be contained within our Q1 trading statement scheduled for 23 April 2020.
Whilst the near term demand outlook for our products and services continues to evolve and remains uncertain, we have put in place a broad range of measures to significantly reduce cost and manage our liquidity over the coming months.
Financing and liquidity
As reported at our full year results on 25 February 2020, as at 31 December 2019, our borrowing and financing position were as follows:
Net Debt and covenants
At 31 December 2019, our net debt including leases was £911m, of which £758m was bank and other borrowings net of cash and £153m related to leases. Our net debt to EBITDA ratio was 1.8x on a reported basis (2018: 2.3x) and 1.5x on a covenant basis (2018: 1.8x) compared with our covenant limit of 3.5x. Our interest cover was 16.3x (2018: 14.7x) compared with our covenant of interest cover being greater than or equal to 3.0x.
Facilities and financing
At 31 December 2019, we had £1,564m of committed facilities in place providing headroom of £806m above our net borrowings of £758m. In 2020, we have USD$ 275m of debt maturing for which we have fully committed facilities in place (entered into in December 2019). These facilities consist of three bilateral loans extending to at least December 2022. Within our committed facilities of £1,564m at 31 December 2019, we have a USD$ 750m Revolving Credit Facility available that is due for renewal in September 2021.
Medical ventilators
In response to the UK Government’s request for additional medical ventilators, Meggitt is leading a consortium of UK aerospace suppliers working to develop and produce, in large volumes, a ventilator that meets their requirements for a rapidly manufactured ventilator.
Outlook
At the current time, and in light of a highly fluid market and global macro-economic situation, it is too early to provide earnings guidance for the remainder of the current financial year.
We have put in place a set of measures to tightly manage the business and navigate our way through these challenging times. We will continue to monitor external events and manage the situation closely and will keep the market updated on developments as appropriate.
