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Meggitt Q1 Organic Revenue Rises; To Cut Pay, 15% Workforce

Aerospace, defence and energy company Meggitt PLC (MGGT.L) Thursday reported that its first-quarter group revenue was up 5 percent on an organic basis, with strong growth in defence more than offsetting a softer performance in civil aerospace and energy.

In its trading update, the company said the first-quarter trading was ahead of last year, but in the last few weeks the company started to see a softening in civil aerospace business both in terms of revenue and the forward order book.

Civil aerospace revenue was slightly higher than last year on an organic basis. Defence revenue increased 15 percent organically, driven by particularly strong growth for original equipment. Energy revenue was 3 percent lower.

Further, the company said Covid-19 will result in a significant reduction in demand across civil aerospace business in 2020 in both OE and AM.

To mitigate the reduction in demand, the company has already taken action to reduce variable costs including accessing furlough schemes where available and reducing temporary labour.

The company said it has decided to reduce the size of global workforce by around 15 percent, subject to ongoing consultation in the regions in which it operates.

The company is also implementing a number of other measures to reduce operating cost base in 2020. These include a freeze on all new hiring; removal of annual salary increases for all employees; material cuts in operating costs; and, for the second half, reducing fees for Non-Executive Directors and salaries for CEO, CFO and Executive Committee by 20 percent.

The successful implementation of these combined measures throughout the year will be to reduce cash expenditure levels by around 400 million pounds to 450 million pounds in 2020.

Looking ahead, the company said it remains the Board's position that it is too early to provide forward looking guidance at the current time.

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