Melrose sets ambitious £1.2bn profit target

Pure-play aerospace giant Melrose has launched new five-year targets, with its sights set on delivering £1.2bn of profit.

Record order backlogs for new aircraft, aftermarket growth, and its already strong position have fuelled Melrose’s target of high single-digit annual top-line growth, leading to £5bn of revenue in 2029.

Melrose expects its cash generation to increase dramatically over the period, to £600m (after interest and tax) in 2029, due to profit growth, increasing aftermarket cash flows, and falling current one-time costs.

Despite industry-wide supply chain issues, Melrose’s adjusted operating profit rose 42% to £540m in 2024, coming in at the top of expectations. Its strong performance has confirmed guidance of £700m of adjusted operating profit for 2025.

Revenue for the aircraft components and systems manufacturer grew by 11% to £3.47bn, after the group offloaded its GKN Automotive and GKN Powder Metallurgy businesses to become a pure-play aerospace company.

Melrose is investing up to £300m over the next five years to develop additive fabrication solutions, which are in demand from all major engine OEMs. Its first dedicated factory is already building out its early production capacity for the technology.

Contracts were secured with Pratt & Whitney, with FAA approval secured and flight-critical additive fabrication component deliveries now well underway. It expanded its partnership with GE Aerospace to develop its fastest-selling high-thrust engine, with the new agreement covering new technology insertion, repair of engine structures and production of fan cases for GE engines.

Peter Dilnot, Chief Executive Officer of Melrose Industries said: “Melrose delivered a strong 2024 performance driven by 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.

“We are well positioned for further progress in 2025, including the expected delivery of substantial free cash flow, despite ongoing industry challenges. We are also excited to launch our five-year targets that include more than 20% annual EPS growth through the period and free cash flow generation of £600 million in 2029. Our confidence in future growth is underpinned by market leading technologies and established positions on all the world’s major aircraft.”