17th May 2023 15:18
(Alliance News) - Melrose Industries PLC on Wednesday provided updated guidance figures for 2025, after recently announcing it will sharpen is focus on the aerospace sector following its demerger of Dowlais Group PLC.
Melrose said it expects total Aerospace revenue to hit GBP4.0 billion in 2025. This would be above its Aerospace revenue forecast range of GBP3.35 billion and GBP3.45 billion for 2023.
Melrose had reported revenue of GBP7.54 billion in 2022, though that included the recently demerged Dowlais Group PLC.
It expects earnings before interest, tax, depreciation and amortisation for Aerospace to total GBP870 million in 2025, with an Ebitda margin of 22%.
Melrose explained that, for the first time, Aerospace will be reported as divisions: Engines and Structures.
Engines revenue is expected at GBP1.8 billion in 2025, while Structures revenue is seen at GBP2.2 billion. Ebitda is seen at GBP580 million for Engines and GBP290 million for Structures.
The company explained that its Aerospace profit is increasingly coming from Engines, with over 85% of this expected from aftermarket activities by 2025.
"We are making clear today that after 5 years hard work, Aerospace is now positioned to fulfil the potential it had at acquisition, with a highly enviable aftermarket presence and predictable strong cashflows. This is a great business in a very attractive global aerospace sector and is being deliberately focused to produce both top level equity performance and very significant cash returns," said Simon Peckham, chief executive officer.
Melrose noted that its free cash flow margin is expected to reach 12% in 2025, eventually rising to greater than 20% long-term. This, it said, gives the company the capacity, from 2024 onwards, after the completion of current restructuring programmes, to buy back between 5% and 10% of its market capitalisation per year, in addition to paying a progressive annual dividend.
Shares in Melrose jumped 4.9% to 490.40 pence on Wednesday in London.
By Heather Rydings, Alliance News senior economics reporter
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