Last close As at 05/08/2026
GBP4.65
▲ −5.50 (−1.17%)
Market capitalisation
GBP5,792m
Research: Industrials
Melrose Industries continues to deliver strong performance improvements and is on track to achieve its ambitious margin targets in 2025 (Engines 28% and Structures 9%). As a focused aerospace group, Melrose is also benefiting from the positive long-term drivers in the sector with record civil order backlog. This bodes well for continued earnings momentum and cash generation to drive shareholder value.
Melrose Industries |
Steady climb |
Trading update |
Aerospace and defence Sector |
2 May 2024 |
Share price performance
Business description
Analyst
Melrose Industries is a research client of Edison Investment Research Limited |
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Melrose Industries continues to deliver strong performance improvements and is on track to achieve its ambitious margin targets in 2025 (Engines 28% and Structures 9%). As a focused aerospace group, Melrose is also benefiting from the positive long-term drivers in the sector with record civil order backlog. This bodes well for continued earnings momentum and cash generation to drive shareholder value.
Year end |
Revenue (£m) |
PBT* (£m) |
EPS* |
DPS |
P/E |
Yield |
12/22 |
2,954 |
89 |
4.1 |
2.3 |
151.5 |
0.4 |
12/23 |
3,350 |
331 |
19.5 |
5.0 |
31.8 |
0.8 |
12/24e |
3,677 |
456 |
26.7 |
6.7 |
23.3 |
1.1 |
12/25e |
4,028 |
575 |
34.3 |
9.3 |
18.1 |
1.5 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
The Q1 update is in line with management’s expectations with no change to the recently upgraded guidance for the full year. Some H2 weighting is expected, primarily due to the timing of improvements in the Structures division.
The Engines division achieved growth of 21% despite the strong comparison period (+28% in first four months of 2023). The mix was orientated towards the aftermarket (Risk and Revenue Sharing Partnership business and repairs) which is beneficial to the trading margin. Original equipment market growth has been slower, reflecting supply chain constraints, although Airbus +12% and Boeing +13% are both expected to report significant delivery growth this year albeit Boeing clearly has ongoing issues with the 737MAX (note Melrose has limited exposure to this programme).
The Structure division turnover was flat, reflecting the planned exit of non-core work and well-documented destocking by a major customer. As part of the restructuring the St Louis site defence business has been sold to its customer Boeing (terms not disclosed). We expect exiting loss/low margin business and timing of benefits from restructuring to skew profitability to the second half.
The next scheduled update for investors is the interim results on 1 August.
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Research: Real Estate
Ahead of FY24 results to be published on 23 May, Picton Property Income has declared a Q424 DPS of 0.925p, a 5.7% increase on the previous quarter. The company intends to maintain fully covered dividends at the new level, an annualised run rate of 3.7p, well above the pre-pandemic DPS and the 3.5p paid in respect of FY24. The uplift reflects a continuing robust occupier market, supporting rental growth, as well as asset management activity, most notably the recent sale of Angel Gate. The sale was part of Picton’s strategy to accelerate the unlocking of value in its portfolio through the selective repurposing of office assets and accretively recycle the capital. Further repurposing asset management initiatives are being progressed.