17th Oct 2023 08:57
(Alliance News) - Melrose Industries PLC on Tuesday said its Engines business continues to outperform guidance, adding to the group's confidence in meeting its 2025 targets.
The Birmingham, England-based manufacturer said it "can now confirm" that Engines's adjusted operating margin will continue to outperform against previous guidance. It now expects a full-year 2023 margin of around 24%, instead of the 22% forecast in mid-May.
Also in mid-May, Melrose said it expected Engines to deliver GBP1.3 billion in revenue in 2023, and GBP1.8 billion with a 28% operating margin in 2025. It said at the time that Engines was providing a substantial majority of profits from its Aerospace business, which is divided into the Engines and Structure divisions. Aerospace is expected to deliver GBP3.4 billion total revenue in 2023 and GBP4.0 billion in 2025.
"Melrose has full confidence that the 2025 targets will be achieved and current trading makes that more secure," the FTSE 100 company said on Tuesday. It added that the "biggest single reason" for the outperformance was continued strong aftermarket demand at high margins.
Also on Tuesday, Melrose said it expects 80% of profit to come from Engines, over 80% of which will be from aftermarket trading, although it did not give a timeframe. It added that the business has strong long-term demand for its proprietary technologies "which will shape new ways for the industry to improve".
"The quality of our Engines business continues to shine through with margins exceeding expectations," said Aerospace Chief Executive and Melrose CEO Designate Peter Dilnot. "The [Engines Investor Event in Trollhattan, Sweden] this week will highlight our unique and diverse portfolio of engines contracts entering their lucrative aftermarket phase, together with strong demand for our proprietary breakthrough technology, such as additive fabrication."
Dilnot continued: "With positive momentum evident, we are confident of delivering strong returns and achieving our 30% margin target in the years ahead."
Melrose Industries shares were up 1.7% at 486.62 pence in London on Tuesday morning.
By Emma Curzon, Alliance News reporter
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