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BBA Aviation profits to be broadly in line with expectations - trading update

BBA Aviation profits to be broadly in line with expectations - trading update

Thu 8 Nov 2018 07:36 by ukcitymedia.co.uk about : trading updates - 0 Comments - 1130 words


BBA Aviation (the "Group"), a market-leading provider of global aviation support and aftermarket services, announces a trading update for the period 1 January to 31 October 2018, unless otherwise stated.

 

Overall, for the Total Group, we expect 2018 FY underlying operating profit to be broadly in line with expectations with the performance at Ontic and our discontinued ERO business in part offsetting the softer than expected US B&GA market, which has impacted our Signature performance.

 

The continuing Group's total revenue increased by 27% year-on-year for the ten months to 31 October, this represents year-on-year growth of 30% in Signature, reflecting the EPIC acquisition and our commercial renegotiations. The year-on-year revenue growth in our Aftermarket Services business was 2.2%. On a like-for-like basis (constant currency, adjusted for fuel prices and before acquisitions) continuing Group revenue increased by 2.2%, reflecting 3.0% organic revenue growth in Signature and 4.4% organic revenue decline in Aftermarket Services, due to the expected non-repeat of cyclical military orders in 2017.

 

Market data for July and August showed marginal growth in US B&GA movements of 0.8%. Signature has continued to outperform the US B&GA market during this period by 130 basis points, with organic revenue growth of 2.1%. This reflects a narrowing of our market outperformance against the first half, as we anticipated, due to the commercial renegotiations positively impacting from H2 2017.

 

No US B&GA market movement data is yet available for the September and October periods; however, Signature's organic revenue was flat year on year for the four months ended 31 October 2018, which includes the September month which was positively impacted in the comparative period, by one-off US B&GA movements as a result of hurricanes Irma and Maria in September 2017.

 

While we pointed to a softening of the US B&GA market at the half year, with expectations of the second half being broadly consistent with the first half, at around 2%, recent market data clearly implies a headwind to this expectation.

 

Following on from the recent acquisitions of EPIC and Firstmark Corp, we are pleased to have reached an agreement to acquire St Thomas Jet Centre located at Cyril E.King - Charlotte Amalie Airport in St. Thomas, United States Virgin Islands. This will further expand our presence in the Caribbean. The acquisition will occur in two phases - we have acquired a holding of 49% and will acquire the remaining 51% of the business within 14 months. The St Thomas Jet Centre comprises an executive terminal, aircraft maintenance and storage hangar and a newly constructed fuel farm. We continue to invest for future growth in support of the execution of our strategic growth plan.

 

Ontic, which represents substantially all of our Aftermarket Services business, saw revenues for the ten months to 31 October up 3.0% while on a like-for-like basis (constant currency and before acquisitions) declined by 3.8%, reflecting the expected non-repeat of cyclical military orders in 2017. We were pleased to announce recently the acquisition of Firstmark Corp, an aerospace focused aftermarket service provider, which is expected to complete late in 2018.

 

Mark Johnstone, BBA Aviation Group CEO commented "While we noted a softening of the US B&GA market in the summer, the market continues to be impacted by global economic uncertainty which is impacting flying hours. We continue to believe that over the longer term flying hours are correlated to US GDP and this is supported by many of the typical market indicators which remain positive. In addition, Signature's organic revenue growth continues to outperform US B&GA movements growth due to the strength of our market leading network. Ontic and our discontinued ERO business continue to perform well. We look forward to setting out our growth opportunities, for both Signature and Ontic, at our Capital Markets Days next week."



These articles are usually news summaries / highlights and dont always include all financial news updates. Check at company website INVESTORS INFORMATION for full published results.


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