(Rewrites throughout.)

By Simon Zekaria

LONDON--British engineering firm Meggitt PLC (MGGT.LN) Tuesday said it has a "strong order book" this year, even as it posted a decline in full-year profit as lower military revenue, foreign-currency effects and asset disposals hit trading.

The aerospace, defense and energy group, which makes around $2 billion a year selling components including for aircraft such as flight instruments and braking systems to companies like Boeing Co., posted a pretax profit of GBP208.9 million ($322.8 million) in 2014, down 22% from GBP269.4 million in 2013.

Net profit was GBP177 million, down from GBP232.3 million. Revenue--of which about half comes from the U.S.--fell 5% to GBP1.55 billion.

At 0848 GMT, Meggitt shares were down 3.1% at 553.5 pence.

More than three-quarters of the company's revenue comes from civil aerospace and military operations, but like other defense industry component makers, Meggitt has seen a decline in military spending as governments, including in the U.S., cut back budgets to rein in costs.

As a result, it has had to shift more resources to energy markets such as making components for industrial gas turbines and offshore gas processing.

"2014 was a challenging year for the group," said Chief Executive Stephen Young.

Still, Meggitt said revenue returned to growth in the second half of the year and added it has a "strong order book" this year, supported by spending on research and development, as well as product innovation. It also said the company has improved cash flow and a strong balance sheet.

Meggitt declared a dividend of 13.75 pence, up 8% from 12.75 pence in 2013.

For 2015, the group said it expects revenue excluding acquisitions and disposals growing in the low to mid-single digit percentage points, in line with previous guidance.

It said the the outlook for civil aerospace markets--which include large commercial jets, regional aircraft and business jets--remains encouraging. It also said the military market is entering a more "benign phase".

Separately, the group said it has won a "multi-million dollar" aviation fire protection contract in China. First delivery is planned for 2019 with production expected to last at least 25 years, it said, without disclosing financial details.

The deal, in which Meggitt and AVIC Aircraft Xi'an branch will jointly develop the fire protection systems, involves work for the MA700 70-seat regional aircraft, it said.

Meggitt has a workforce of over 10,500 people in facilities across Asia, Europe and North America, as well as regional bases in Brazil, India and the Middle East. Its equipment is installed on over 60,000 aircraft worldwide.

--Write to Simon Zekaria at simon.zekaria@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires