January 21, 2019 / 7:40 AM / 9 months ago

Meggitt signs $750 million contract with engine maker Pratt & Whitney

(Reuters) - British engineering firm Meggitt Plc (MGGT.L) said on Monday it had signed a $750 million contract with Pratt & Whitney (UTX.N) to continue supplying components for two of the U.S. firm’s engines.

The 10-year contract is to supply advanced composite components for the F119 and F135 engines that power Lockheed Martin’s (LMT.N) F-22 Raptor and F-35 Lightning II military aircraft.

The deal comes after U.S. President Donald Trump pledged to raise the country’s defense spending budget to an all-time high. The United States accounts for 54 percent of Meggitt’s revenue.

“We figure the value of $750 million over 10 years illustrates the increased significance of Meggitt as a supplier to P&W,” Jefferies analysts said in a note.

In October last year, Meggitt warned investors that difficulties in its polymers and composites unit, which makes sophisticated engine parts that can withstand high temperatures from composite materials, would drag on margins this year.

However, the company added its third quarter was buoyed by demand from civil aerospace customers, with more planes - both large jets and business jets - manufactured, and fewer aircraft retirements fuelling demand for spare parts.

Reporting by Sangameswaran S in Bengaluru; Editing by Rashmi Aich and Mark Potter

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