Melrose Industries (LSE: MRO) has reported a sharp swing to profit and raised its dividend, as booming defence demand and operational efficiencies helped offset a slight drop in revenue.
The aerospace engineering firm posted a pretax profit of £379 million for the first half of 2025, compared to a £105 million loss a year ago. Adjusted pretax profit also rose 22% to £248 million.
While revenue dipped 1.3% to £1.72 billion, the company slashed costs: cost of sales fell by over 5% and operating expenses were trimmed dramatically to just £13 million from £466 million. The margin gains allowed the company to boost its interim dividend to 2.4p per share, a 20% increase year-on-year.
Shares climbed 5.2% by mid-morning in London following the upbeat results.
Melrose said it is benefiting from long-term structural growth in all of its markets, with particularly strong tailwinds from surging global defence spending. CEO Peter Dilnot said the firm’s multi-year transformation programme is on track to complete by year end, with the operational and strategic improvements already filtering through to the bottom line.
“We are confident about delivering sustained increases in profit and cash flow in the years ahead,” Dilnot said, reaffirming the company’s free cash flow target of £600 million by 2029.
Melrose maintained its full-year outlook on a constant currency basis and said it is making strong progress commercialising next-generation aerospace technology, as it continues to position itself on major civil and military aircraft platforms.