Last close As at 05/08/2026
GBP4.65
▲ −5.50 (−1.17%)
Market capitalisation
GBP5,792m
Research: Industrials
Melrose Industries’ H224 trading has been in line with management’s expectations despite the volatility in the civil aerospace market, highlighting the strength of the business, in particular in the aftermarket. As 2024 draws to a close and investors look to focus increasingly on FY25, Melrose’s valuation becomes increasingly attractive.
Melrose Industries |
H224 progress in line with guidance |
Trading update |
Aerospace and defence Sector |
18 November 2024 |
Share price performance
Business description
Analyst
Melrose Industries is a research client of Edison Investment Research Limited |
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Melrose Industries’ H224 trading has been in line with management’s expectations despite the volatility in the civil aerospace market, highlighting the strength of the business, in particular in the aftermarket. As 2024 draws to a close and investors look to focus increasingly on FY25, Melrose’s valuation becomes increasingly attractive.
Year end |
Revenue (£m) |
PBT* (£m) |
EPS* |
DPS |
P/E |
Yield |
12/22 |
2,954 |
89 |
4.1 |
2.3 |
120 |
0.5 |
12/23 |
3,350 |
331 |
19.5 |
5.0 |
25.1 |
1.0 |
12/24e |
3,677 |
452 |
26.8 |
6.7 |
18.2 |
1.4 |
12/25e |
4,028 |
566 |
34.5 |
9.3 |
14.2 |
1.9 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Trading for the four months to the end of October is in line with expectations and there are no changes to management’s guidance for FY24 or FY25 (operating profit of £550–570m and FY25 operating profit target of £700m). Our forecasts also remain unchanged.
Melrose’s organic revenue growth for July–October was 7% (H124: 12%). The Engines division growth was 17% (H1: 21%), with strong aftermarket business up by 32% (H1: 31%). This was driven particularly by a positive defence market and the continued recovery in flying hours, benefiting the group’s strong risk and revenue sharing partnership (RRSP) business. The original equipment (OE) business continues to be affected by volatility in the civil market, which was also seen more granularly in the Structures division. Structures sales growth was 1% (H1: 1%) excluding the exited businesses in North America and reflecting OE volume reductions announced by the primes (Boeing and Airbus), affected by the dislocation in the supply chain and destocking. Benefiting from restructuring programmes, Melrose’s operating profit continues to make progress. Foreign exchange remains a small headwind for the year.
Management’s guidance for FY24 and FY25 is unchanged, with the company highlighting its expectation for cash generation to improve ‘significantly’ in FY25 and increase further in future years as the restructuring programmes are completed, GTF engine issues are resolved and all the engine RRSPs become cash positive.
Melrose’s full-year results are expected on 6 March 2025 and will include financial targets for beyond FY25.
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Research: TMT
Dentsu posted Q324 organic net revenue growth of 0.3%, making a decline of 1.1% over the nine-month period. This is slightly below expectations at the half-year and, as the market for larger, transformational projects is still stagnant, management has trimmed full year organic revenue growth guidance to 0% (was 1%) and that for adjusted operating profit by 7%. There are positive elements to these figures, in particular continuing progress in Japan and good new business boosted by the ‘one dentsu’ initiative. The unveiling of the mid-term management plan has been delayed to February 2025, with the FY24 figures. Post the reaction to the Q3 figures, the shares now trade at a 10% discount to peers on EV/EBITDA.