Meggitt Plc has been working hard to position itself as the focused
aerospace, defense and electronic sensors group it has now become.
Since April 2002 the company has acquired five new businesses
to expand its expertise in avionics and systems in a quite deliberate
attempt to take advantage of the rationalization of the 'bigger
players' in the market.
In the hunt for these hidden gems Meggitt has spent more than
£86 million to buy Kaman's RF cable products, military product
lines from BAE Systems Avionics, Lodge sensors from Smiths, the
TCC valve product line from GE and, most recently, agreed the
sale the Caswell International Corporation.
Over the same period Meggitt has divested itself of several assets
it no longer sees as core business, such as in the oil industry.
This process lies at the heart of the strategy espoused by CEO
Terry Twigger-to develop new products for organic growth and complement
that with selective acquisitions. "Our aim," he says
"is to grow in double figures over a business cycles. That's
50% organic, so 50% has to come by acquisition."
Meggitt's great strength lies in the number of civil and military
programs that are touched by its product line around the world.
As Twigger points out, "It's not a large ship-set value,
somewhere between $50,000 and $250,000 per aircraft-but that's
on virtually every aircraft in the world."
There is hardly a single major OEM in the airframe, propulsion
or vehicle systems sphere that does not have a relationship with
Meggitt. They range from Boeing, Airbus, Embraer, Bombardier,
General Electric and Pratt & Whitney to Taiwan's AIDC and
Switzerland's Pilatus. Meggitt's 2002 turnover lay 38% in civil
aerospace (down from 48% in 2001) and 36% in military aerospace
(up from 25% in 2001. The remaining income was from aerospace
derivatives and non-aerospace electronics. In the longer term,
Meggitt is hoping for a 40:40:20 revenue split between its civil,
military and pure sensors product lines.
A quick look at some of the recent program wins by Meggitt's various
defense and aerospace concerns underlines just how diverse the
company is. It now has equipment on the Airbus A380 through its
engine monitoring systems for the Rolls-Royce Trent 900 and the
Alliance Engine GP7200. Similar equipment has been selected for
the C-17 Globemaster III, C-5 Galaxy and the Joint Strike Fighter.
Meggitt is providing cockpit displays for the Pilatus PC-21 and
PC-9 Mk II trainers, plus a range of systems for the AIDC Ching-Kuo
(Indigenous Defense Fighter) mid-life upgrade program for the
Republic of China air force. The company is also pushing ahead
with its MAGIC advanced cockpit fit for general aviation aircraft.
Meggitt is well known for its unmanned drones and airborne targets,
which are set to be revolutionized by the high-speed Voodoo target.
However, the company is now very active in the target-scoring
arena, with evaluation systems for air and ground ranges.
Meggitt has its own interesting forecast for future large airliner
sales. It thinks that the annual production of large commercial
jets will remain flat at 500 aircraft for 2003 and 2004, before
climbing to 550 by 2005. Meggitt says these figures account for
the war in Iraq if not for the 'SARS effect,' but the company
does believe them to be a fair reflection of the state of play.
Meggitt makes no distinction in its figures between Boeing and
Airbus-"We don't care who sells it", smiles Twigger.
"We'll still be on it."
