BBA Bba Aviation Plc

TIDMBBA

RNS Number : 7062G

BBA Aviation PLC

08 November 2018

8 November 2018

BBA Aviation trading update

BBA Aviation (the "Group"), a market-leading provider of global aviation support and aftermarket services, announces a trading update for the period 1 January to 31 October 2018, unless otherwise stated.

Overall, for the Total Group, we expect 2018 FY underlying operating profit to be broadly in line with expectations with the performance at Ontic and our discontinued ERO business in part offsetting the softer than expected US B&GA market, which has impacted our Signature performance.

The continuing Group's total revenue increased by 27% year-on-year for the ten months to 31 October, this represents year-on-year growth of 30% in Signature, reflecting the EPIC acquisition and our commercial renegotiations. The year-on-year revenue growth in our Aftermarket Services business was 2.2%. On a like-for-like basis (constant currency, adjusted for fuel prices and before acquisitions) continuing Group revenue increased by 2.2%, reflecting 3.0% organic revenue growth in Signature and 4.4% organic revenue decline in Aftermarket Services, due to the expected non-repeat of cyclical military orders in 2017.

Market data for July and August showed marginal growth in US B&GA movements of 0.8%. Signature has continued to outperform the US B&GA market during this period by 130 basis points, with organic revenue growth of 2.1%. This reflects a narrowing of our market outperformance against the first half, as we anticipated, due to the commercial renegotiations positively impacting from H2 2017.

No US B&GA market movement data is yet available for the September and October periods; however, Signature's organic revenue was flat year on year for the four months ended 31 October 2018, which includes the September month which was positively impacted in the comparative period, by one-off US B&GA movements as a result of hurricanes Irma and Maria in September 2017.

While we pointed to a softening of the US B&GA market at the half year, with expectations of the second half being broadly consistent with the first half, at around 2%, recent market data clearly implies a headwind to this expectation.

Following on from the recent acquisitions of EPIC and Firstmark Corp, we are pleased to have reached an agreement to acquire St Thomas Jet Centre located at Cyril E.King - Charlotte Amalie Airport in St. Thomas, United States Virgin Islands. This will further expand our presence in the Caribbean. The acquisition will occur in two phases - we have acquired a holding of 49% and will acquire the remaining 51% of the business within 14 months. The St Thomas Jet Centre comprises an executive terminal, aircraft maintenance and storage hangar and a newly constructed fuel farm. We continue to invest for future growth in support of the execution of our strategic growth plan.

Ontic, which represents substantially all of our Aftermarket Services business, saw revenues for the ten months to 31 October up 3.0% while on a like-for-like basis (constant currency and before acquisitions) declined by 3.8%, reflecting the expected non-repeat of cyclical military orders in 2017. We were pleased to announce recently the acquisition of Firstmark Corp, an aerospace focused aftermarket service provider, which is expected to complete late in 2018.

Mark Johnstone, BBA Aviation Group CEO commented "While we noted a softening of the US B&GA market in the summer, the market continues to be impacted by global economic uncertainty which is impacting flying hours. We continue to believe that over the longer term flying hours are correlated to US GDP and this is supported by many of the typical market indicators which remain positive. In addition, Signature's organic revenue growth continues to outperform US B&GA movements growth due to the strength of our market leading network. Ontic and our discontinued ERO business continue to perform well. We look forward to setting out our growth opportunities, for both Signature and Ontic, at our Capital Markets Days next week."

Enquiries:

BBA Aviation plc

David Crook, Group Finance Director

Kate Moy, Head of Investor Relations and Communications

(020) 7514 3999

Tulchan Communications

David Allchurch

(020) 7353 4200

Information on BBA Aviation plc

BBA Aviation plc is a market leading, global aviation support and aftermarket services provider, primarily focused on servicing the Business and General Aviation (B&GA) market. We support our customers through three principal businesses: Signature Flight Support, Signature TECHNICAir(TM) and EPIC Fuels which provide premium, full service flight and home base support including refuelling, ground handling and MRO services through the world's largest fixed base operation (FBO) network for B&GA users with around 200 locations covering key destinations in North America, Europe, South America, Caribbean, Africa and Asia. EPIC Fuels is a global provider of aviation fuels, supplies and services. Ontic is a leading provider of high-quality equipment and cost-effective solutions for the continuing support of maturing and legacy aerospace platforms with locations in the USA, Europe and Asia. Engine Repair & Overhaul (ERO)/Global Engine Services is a leading independent engine service provider to global B&GA operators, the rotorcraft market and regional airline fleets with locations in the USA, Europe, South America, Asia and the Middle East.

On 1 March 2018 BBA Aviation announced that it was conducting a strategic review of the ERO business and, at the end of May 2018, management committed to a plan to sell substantially all of the business and the relevant assets and liabilities were classified as held for sale.

For more information, please visit www.bbaaviation.com

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