Melrose Industries PLC on Thursday delivered annual profit ahead of expectations, and upbeat mid-term targets driven by robust industry demand and ongoing aftermarket growth.

Despite this shares in the Birmingham-based aerospace manufacturer fell 12% to 601.00 pence each in London on Thursday. They are up 8.2% in 2025 to date.

Peel Hunt noted the stock ‘has been strong into the numbers, so there is a balance to play in the short term: unchanged guidance against this longer-term premium growth profile. We would ride with it and maintain our buy recommendation.’

Analysts at Stifel agreed, stating the held guidance was the only ‘niggle’.

‘The stock has run hard into the results, and the lack of an immediate raise to 2025 may be the one aspect of the release to cause minor disappointment.’

Melrose said adjusted basis pretax profit rose 36% to £438 million in 2024 from £331 million a year prior. On a statutory basis, the firm saw its pretax loss widen to £106 million from £8 million.

Adjusted operating profit, post DLC costs of £30 million, totalled £540 million in 2024, up 42% from £390 million in 2023, and ahead of company-compiled consensus of £528 million.

Melrose considers adjusted results, which exclude volatile and often non-recurring items, a better base for more consistent comparisons.

Revenue increased by 3.6% to £3.47 billion from £3.35 billion, below company compiled consensus for £3.56 billion.

Engines saw revenue grow 26% to £1.46 billion with adjusted operating profit up 40% to £422 million and adjusted operating margin up to 28.9%.

Structures reported revenue growth of 3% to £2.01 billion, and adjusted operating profit of £144 million with margins increasing to 7.2% from 5.1% in 2023, driven by benefits from restructuring and business improvements.

The total dividend was increased 20% to 6.0 pence per share from 5.0p, including a final payout of 4.0p per share, up 14% on-year.

Melrose confirmed guidance for 2025, forecasting continued profit growth, completion of transformational restructuring and substantial positive free cash flow.

It expects revenue of £3.55 billion to £3.70 billion, and adjusted operating profit, pre-PLC costs, between £680 million to £720 million, reflecting an adjusted operating margin1 of more than 19%.

In 2024, group adjusted operating profit margin rose 4.0 percentage points to 15.6%.

Melrose also launched new five-year targets launched, targetting high single digit compound annual revenue growth to around £5 billion, adjusted operating profit of £1.2 billion plus and free cash flow [after interest and tax] of £600 million.

The targets deliver more than 20% adjusted diluted earnings per share CAGR from 2024 to 2029, with free cash flow set to more than quadruple from 2025 to 2029.

Chief Executive Peter Dilnot said 2024 results benefited from ‘robust industry demand, ongoing aftermarket growth and the impact of extensive business improvement actions. This was achieved against the backdrop of ongoing industry-wide supply chain issues.’

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