Melrose commits to aerospace after automotive spin-off

Birmingham manufacturing giant Melrose Industries has said it will become a pure-play aerospace company, following the demerger of its automotive unit.

The firm announced in its trading update that it will not pursue any acquisition of an unrelated industrial business or, in the near term, a material aerospace business.

As its aerospace restructuring completes over the next 12 months, it says the strategy will enable Melrose to consistently buy back a proportion of its shares each year thereafter.

Melrose, which will now report as two divisions: Engines and Structures, saw a revenue increase by 19% in comparison to the same period in 2022. Engines has showed the fastest momentum, up 28%, and Structures up 14%.

The company expects revenues of £3.4bn, whilst analysts predict revenue between £3.35bn and £3.45bn for 2023.

The move follows the recent demerger of GKN’s Automotive, Powder Metallurgy and Hydrogen businesses into the newly created Dowlais, which is now a standalone business on the stock exchange.

Simon Peckham, Chief Executive of Melrose Industries PLC, said: “Aerospace has huge embedded value and an EBITDA of £1 billion is achievable within the next few years, much of this coming from the premium Engines business.  

“With the new simplified strategy for Melrose announced today, we look forward to explaining the full potential of Aerospace at the upcoming Capital Markets Event next week including the route to realising this value.”