REG - Melrose Industries - AGM Trading Update

Melrose IndustriesAnnouncement

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RNS Number : 7175G  Melrose Industries PLC  30 April 2025

30 April 2025

 

MELROSE INDUSTRIES PLC - AGM TRADING UPDATE

 

Ahead of its AGM this morning, Melrose Industries PLC ("Melrose"), a leading
global aerospace technology business, announces the following trading update
for the first quarter ended 31 March 2025 ("the Period").  All growth rates
are stated at constant currency and on a like-for-like basis.

 

Peter Dilnot, Chief Executive Officer of Melrose said:

"We have made a good start to the year with revenue, profit and cash in the
first quarter in line with our expectations.

 

The recent introduction of tariffs has created additional complexity across
the aerospace industry.  We have acted swiftly to evaluate potential effects
on the Group and have a path to successfully mitigate our identified direct
exposure at current tariff levels.  The situation remains fluid, and we will
continue to work closely with our customers and suppliers to respond as
needed.

 

Melrose has established positions on all the world's leading aircraft and
underlying demand remains very strong in both our Civil and Defence markets.
Our business improvements are reading through with more benefits to come going
forwards.  We are therefore confident about delivering profitable growth and
significantly increasing free cash flow in 2025 and in the years ahead."

 

First quarter trading

Melrose has made a positive start to the year, with Group revenue up 6% on the
comparative period, with strong progress in Engines, up 9%, and Structures up
4%. As a result of our restructuring and business improvement actions,
adjusted operating profit was well ahead of the same period last year.  Net
debt and free cash flow at period end were in line with our expectations.

 

Engines

The performance in Engines was largely driven by strong OE volumes and
favourable mix.  While we saw good growth in the aftermarket in both RRSPs
and our repairs business, this was partially offset by military, which had a
particularly strong year in 2024. The drop through impact of higher revenue
and increased productivity resulted in an improvement in operating margins
with adjusted operating profit well ahead of the comparative period.

 

Structures

Revenue growth in Structures in the first quarter was in line with our
expectations. While the easing of our own supply chain in certain areas has
enabled us to deliver the backlog for individual platforms, overall volumes
continue to be constrained by broader, sector-wide supply chain issues.
Adjusted operating profit for the division was ahead of the comparative
period, reflecting the positive impact on operating margins from business
exits and business improvement actions which will complete this year.

 

 

Tariffs

Our evaluation of the recent imposition of tariffs has primarily focused on
the direct impact on the Group, specifically the movement of products to
customers in the US and the supply of products into our manufacturing sites.

 

For those parts of the Group not able to make use of available exemptions and
those without contractual protections, we are taking a number of measures to
mitigate the impact. These include using mechanisms such as drawback,
adjusting the supply chain and negotiating with customers and suppliers.

 

As a result of the work we have done to date, we have a path to successfully
mitigate our identified direct exposure at current tariff levels.

 

We will continue to monitor the tariff situation closely, remaining alive to
any further changes and ready to respond accordingly.

 

Outlook for full year 2025

Our guidance for the full year, which excluded the impact from tariffs or
trade restrictions, remains unchanged:

 

·    Revenue range of £3.55 billion to £3.70 billion

·    Adjusted operating profit (pre-PLC costs of £30 million) of £700
million

·    Free cash flow generation of >£100 million (after interest and
tax)

·    In line with historical and industry seasonality, profit and cash
will be second half weighted, with negative FCF in the first half

·    Guidance based on US$ = 1.25 average exchange rate 1  (#_ftn1)

 

With attractive fundamentals underpinning our end markets, our leading
technologies and established positions on all the world's aircraft, combined
with successful execution, we remain well placed to deliver growth and
increased free cash flow in 2025 and the years ahead.

 

Melrose Industries will publish interim results for the first half ending 30
June 2025 on Thursday 31 July 2025.

 

Enquiries:

 

Investor Relations:

Chris Dyett: +44 (0) 7974 974 690, ir@melroseplc.net
(mailto:ir@melroseplc.net)

 

Media:

Andy Porter / Brunswick: +44 (0) 207 404 5959, melrose@brunswickgroup.com

 1  (#_ftnref1) When applied to 2024 results, a 10% change in the USD or Euro
in isolation would result in adjusted operating profit moving by £47 million
and £1 million respectively; and gross debt by £113 million and £25 million
respectively.

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