Profits more than double for manufacturing giant Melrose
Aerospace manufacturing giant Melrose is set to more than double its profits compared to last year, driven by higher aftermarket demand and pricing, and the delivery of operational improvements.
The Birmingham industrial firm anticipates revenues of between £3.3bn and £3.4bn thanks to a strong performance from its Engines and Structures divisions. Engines business margins are expected to be boosted by 25% and Structures by 4%.
It’s a 7% profit upgrade to previous expectations, with Melrose setting guidance for its Aerospace adjusted operating profit to be between £400m and £410m.
The news comes during a period of transformation for Melrose, as it restructured the business to focus on aerospace and demerge GKN Automotive, GKN Powder Metallurgy and GKN Hydrogen businesses into Dowlais Group – which as a standalone business has a market value of £1.6bn.
And at the beginning of the month, Melrose announced a $5bn agreement with global aerospace engines market leader GE Aerospace. The pair will work on the GEnx programme – its fastest-selling high-thrust engine. It’s expected that GKN Aerospace sales from the agreement are estimated at around $5bn over the full 30-year plus life of the GEnx engine.
Melrose also released its first guide to 2024 and believes its operating profit will be 4% better than market expectations, “even whilst prudently assuming that demand will continue to be constrained by supply”.
Growth is anticipated to become higher when supply chain challenges ease and the group has set its guidance of an operating profit of between £520m and £540m.
Simon Peckham, Chief Executive of Melrose said: “It is a pleasure to hand over Melrose so well positioned for the future. 2024 will be another year of strong progress under its new leadership as the targets announced in the Capital Markets Event come into sight.”
