Pre-tax profits fall 20% to £98.2 million amid a weak contribution from its military-related business and ongoing currency headwinds which alone resulted in a £53 million hit to revenues. The company says it now expects low single digit revenue growth in 2014 against previous hopes for a mid single digit advance.
Better news is order intake is up 9% to £782.7 million and a strong performance from its civil aerospace arm (selling flight displays and wheels to the likes of Airbus and Boeing) which gives the company 'confidence in the medium-term outlook'. This is reflected in an 8% hike in the dividend to 4.25p per share. It is no surprise the market has little patience though given a patchy track record which saw the company warn on profits last November.
Investec puts its add recommendation and 530p price target under review. It comments: 'Interims were worse than expected with earnings before interest, tax and amortisation (EBITA) of £151 million vs our £166 million.'
'The outlook statement was mixed, but given slower growth assumptions (circa 2% full year 2014 organic constant currency revenues) and a range of issues, including at Heatric (Energy), we are likely to lower our full year 2014 earnings per share (EPS) forecast by 7% to 8%, 'the analysts continue. 'This still leaves a heavy second half bias.'
Cantor retains faith in the story and stays at buy with a 590p price target. Analyst Andy Chambers says: 'The market is likely to take the shares lower, with recent bid speculation having dissipated. However, we are encouraged by the order intake and expectations of improved second half momentum.'