Melrose Industries (LSE: MRO)

Currency in GBP

Last close As at 28/03/2023

GBP1.61

6.85 (4.44%)

Market capitalisation

GBP6,209m

Melrose Industries acquires underperforming industrial companies. It undertakes operational improvements through restructuring and investment before disposing of the assets. Deals are individually financed through new equity (and debt) with proceeds returned in cash post value realisation.

Melrose reported the unaudited results for the demerged Automotive business (to be called Dowlais) with 6% top-line growth, similar to global automotive volumes, and operating profit of £320–330m with margins at 6.3%, up by 0.8%. The Aerospace division traded in line with expectations in 2022 and is experiencing continued strong momentum into 2023. Demerger approval is now expected to be sought in late March.

Latest Insights

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Industrials

Melrose Industries — Positive trajectory

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Melrose Industries — Releasing the potential

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Melrose Industries — Two are better than one

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Melrose Industries — Aerospace rising

Sector

Industrials

Equity Analyst

David Larkam

David Larkam

Analyst, Industrials

Key Management

  • Christopher Miller

    Executive Vice Chairman

  • Geoff Martin

    FD

  • Simon Peckham

    CEO

Balance Sheet

Forecast net debt (£m)

1211

Forecast gearing ratio (%)

17

Share Price Performance

Price Performance
% 1M 3M 12M
Actual 6.5 22.9 29.4
Relative 13.3 23.2 32.4
52 week high/low 165.8p/95.5p

Financials

Melrose Industries’ results highlight that the Aerospace division is recovering ahead of previous management expectations. This should increase the attractions of the new Melrose group post demerger when it becomes a focused aerospace-orientated group. The other half of the demerger, automotive-orientated Dowlais, will offer recovery potential (10%+ margin targets) along with corporate activity expectations.

Y/E Dec Revenue (£m) EBITDA (£m) PBT (£m) EPS (fd) (p) P/E (x) P/CF (x)
2021A 7263.0 676.0 194.0 3.1 51.9 11.2
2022A 8191.0 808.0 384.0 7.0 23.0 8.4
2023E 8912.0 963.0 547.0 10.3 15.6 6.8
2024E 9559.0 1150.0 722.0 13.6 11.8 5.7

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