Melrose Industries

Overview
Price performance
Financials
Research
Thematics

Melrose Industries is a focused aerospace group with activities in engine components and structures, operating in both metallic and composite materials. The group has significant risk reward sharing partnership (RRSP) investments on multiple engine programmes.

The civil aerospace market continues to grow strongly. Melrose has been restructuring to deliver improving performance. FY24 EBIT guidance increased by 6% at the prelims (in line at the AGM update). FY25 remains unchanged, although management emphasised expectations that the key Engines business will see margins above 30% beyond 2025 (current FY25 guidance: 28%). The group’s new strategy is to develop as a focused aerospace business.

Latest Insights

Industrials |
Update

03.06.24

Melrose Industries — Crystallisation of the 2020 Employee Share Plan

Industrials |
Flash note

02.05.24

Melrose Industries — Steady climb

Industrials |
Update

08.03.24

Melrose Industries — Continued outperformance

Industrials |
Update

17.11.23

Melrose Industries — Increasing trajectory

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Sector

Industrials

Equity Analyst

David Larkam

Analyst, Industrials

Key Management

Christopher Miller

Executive Vice Chairman
Matthew Gregory

CFO
Peter Dilnot

CEO

Balance Sheet

Forecast net debt (£m)

1282

Forecast gearing ratio (%)

Share Price Performance

Price Performance
%	1M	3M	12M
Actual	(4.6)	(11.9)	4.3
Relative	(4.6)	(15.4)	(3.2)
52 week high/low	677.6p/446.8p

Financials

FY23 organic growth was 17% and operating margins improved from 5.0% to 11.6%, driving a 165% increase in EBIT. Engines reported 16% growth, with margins up from 15.7% to 26% driven by strong aftermarket business. Structures reported organic growth of 18%, driven by civil, with the margin increased from 1.3% to 5.1% due to restructuring, contract repricing and volume benefits. Net debt was £572m, after £93m of the current £500m share buyback programme, with net debt/EBITDA at 1.1x. Q1 growth was 8%, with engines up 21% and structures flat with no change to guidance.