Melrose Industries (LSE: MRO)

Last close As at 21/06/2024

GBP5.79

3.80 (0.66%)

Market capitalisation

GBP7,660m

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

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Industrials | Flash note

Melrose Industries — Steady climb

Industrials | Update

Melrose Industries — Continued outperformance

Industrials | Update

Melrose Industries — Increasing trajectory

Sector

Industrials

Equity Analyst

David Larkam

David Larkam

Analyst, Industrials

Key Management

  • Christopher Miller

    Executive Vice Chairman

  • Matthew Gregory

    CFO

  • Peter Dilnot

    CEO

Balance Sheet

Forecast net debt (£m)

1126

Forecast gearing ratio (%)

31

Share Price Performance

Price Performance
% 1M 3M 12M
Actual (6.5) (10.4) 14.7
Relative (4.8) (16.0) 5.0
52 week high/low 677.6p/446.8p

Financials

Melrose reported FY23 organic growth of 17% (13% including business being exited) 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% (12% including business being exited), driven by civil with 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.

Y/E Dec Revenue (£m) EBITDA (£m) PBT (£m) EPS (fd) (p) P/E (x) P/CF (x)
2022A 2954.0 292.0 89.0 4.1 141.2 27.9
2023A 3350.0 532.0 331.0 19.1 30.3 14.7
2024E 3677.0 699.0 456.0 26.7 21.7 11.2
2025E 4028.0 839.0 575.0 34.2 16.9 9.1

Research

Update

Industrials

Melrose Industries — Increasing trajectory

Flash note

Industrials

Melrose Industries — GE partnership expansion

Update

Industrials

Melrose Industries — Engine for growth

Flash note

Industrials

Melrose Industries — Clarity on GTF helpful for investors

Update

Industrials

Melrose Industries — Building returns

Update

Industrials

Melrose Industries — The stars are aligned

Update

Industrials

Melrose Industries — Positive trajectory

Update

Industrials

Melrose Industries — Releasing the potential

Thematics

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