Melrose Industries (LSE: MRO)

Last close As at 11/10/2024

GBP4.29

−6.40 (−1.47%)

Market capitalisation

GBP5,529m

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 and revenue sharing partnership (RRSP) investments on multiple engine programmes.

Melrose is negotiating the current industry turbulence from supply chain issues well, assisted by its strong position in the engines aftermarket. A further £250m buyback has been announced, but equally important is the £300m in investment into areas such as additive fabrication to drive growth ahead of the market.

Latest Insights

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Industrials | Update

Melrose Industries — Positive progress continues

Industrials | Flash note

Melrose Industries — Steady climb

Industrials | Update

Melrose Industries — Continued outperformance

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)

1282

Forecast gearing ratio (%)

35

Share Price Performance

Price Performance
% 1M 3M 12M
Actual (7.7) (26.1) (9.4)
Relative (8.5) (26.1) (17.3)
52 week high/low 677.6p/428.6p

Financials

Melrose’s H1 revenue increased by 9% (12% excluding business exited) to £1.7bn and, at the aerospace operating level, the operating margin increased 420bp to 14.9%. Adjusted group operating profit for H1 was £247m (+55%). Engines’ revenue growth of 21% was driven by aftermarket growth of 31%, with the engine repair and defence operations particularly strong. Operating margin increased from 24.5% to 29.4%. Structures’ underlying sales growth was 6%, with the operating margin up from 2.5% to 4.7%. This benefited from restructuring, exiting/repricing certain business and three small disposals.

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 4.1 104.5 20.6
2023A 3350.0 532.0 325.0 19.1 22.4 10.9
2024E 3677.0 699.0 452.0 26.8 16.0 8.2
2025E 3849.0 839.0 561.0 34.6 12.4 6.5

Research

Update

Industrials

Melrose Industries — Continued outperformance

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

Thematics

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Deutsches Eigenkapitalforum (EKF) 2023 industrials

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