UPDATE 1-Meggitt warns on growth hit from 737 MAX difficulties, coronavirus

British engineer Meggitt warned that growth in 2020 and 2021 would be constrained by the halt to production of Boeing's 737 MAX aircraft and the economic impact of the coronavirus.

The company said that organic revenue growth in 2020 would come in between 2% to 4%, and for 2021 it guided that the measure would grow in the range of low to mid-single digits, holding back improvement in its profit margin in the short-term. Those forecasts mean future growth will be lower than last year. For 2019, Meggitt on Tuesday posted an 8% rise in organic revenue growth, helping drive underlying operating profit up by 10% to 402.8 million pounds ($522.19 million).

Meggitt supplies the 737 MAX with parts including a fire protection system for the engine and auxiliary power units. It also makes wheels, brakes and flight deck instruments for other commercial and military aircraft. The 737 MAX has grounded almost a year ago after two crashes killed 346 people, and Boeing halted production of the jet earlier in 2020.

Meggitt said in its statement on Tuesday that the issues at Boeing plus the impact of the rapid spread of the COVID-19 virus, or coronavirus, across Asia and beyond, would affect its future growth. "Sector-specific factors including the production halt of the 737 MAX and supply chain disruption, as well as the wider macroeconomic impact of COVID-19 are expected to hold back margin progression in the short-term," the company said.

The virus is likely to soften global air traffic growth, the company said, which hurts its business supplying parts and services to existing, rather than new jets, plus the virus is disrupting the supply chains of parts. Despite the outlook, Meggitt said it was increasing its full-year dividend by 5% to 17.5 pence.

Separately, the company said its chairman Nigel Rudd intended to leave his role once a successor had been appointed.