Melrose Industries reports strong Q4 revenue, upgrades guidance

Melrose Industries (LSE: MRO) revealed a notable 18% revenue growth for the four months ending October 31. The surge is attributed to heightened underlying demand, particularly in the Engines and Structures segments.

The FTSE 100 listed company reported that its margin performance surpassed expectations, driven by increased aftermarket demand and pricing, coupled with successful operational enhancements. Engines revenue witnessed an 18% upswing, supported by adjusted operating margins exceeding 25%. Structures revenue increased by 17%, with adjusted operating margins surpassing 4%, surpassing prior guidance.

Going forward, Melrose anticipates 2023 revenue ranging between £3.3 billion and £3.4 billion, marking a decline from £7.54 billion in March. However, the company projects a subsequent increase from £3.5 billion to £3.7 billion in 2024.

Melrose has raised its 2023 profit expectations by approximately 7%, signalling a substantial year-over-year profit doubling. The company attributes this optimism to ongoing confidence in business performance, particularly with Engines’ full-year margins expected to reach 25% and Structures’ margins at 4% or more.

Melrose foresees 2023 Aerospace operating profit between £400 million and £410 million, a notable surge from £186 million in 2022, accompanied by an adjusted operating margin of approximately 12%. Looking into 2024, the company projects Aerospace operating profit to range between £520 million and £540 million, with an adjusted operating margin of around 15%.

Year to date, Melrose Industries shares have surged by an impressive 86%, with a substantial 97% year-over-year increase.