Aerospace group Melrose’s revenue outlook triggers share price slide

By Pushkala Aripaka

(Reuters) - GKN (LON:GKN) Aerospace owner Melrose (LON:MRON) forecast 2025 revenue below most analysts’ expectations, sending its shares sharply lower on Thursday, as global trade uncertainties and industry-wide supply chain challenges persist.

Shares of the aerospace parts supplier fell as much as 12%, making it the biggest loser on Britain’s blue-chip FTSE-100 index.

Production delays and supply chain issues at top plane makers Boeing and Airbus have hurt aerospace, but Melrose has benefited from growing demand for after-market services as airlines extend the use of older aircraft.

It is also benefiting from burgeoning spending on defence, which makes up about a third of its business.

"We are well positioned for further progress in 2025, including the expected delivery of substantial free cash flow, despite ongoing industry challenges," CEO Peter Dilnot said.

Melrose did not factor potential trade tariffs in its forecasts but said any impact was likely to be "pretty small" for the company as a whole.

"If they land as they do today and they stick, in the context of a group that’s going to generate 700 million (pounds) of operating profit, it’s pretty small and it really impacts the flow of material between Mexico, where we have quite a large operating base, and into the US," Dilnot told Reuters, referring to Melrose’s forecast for 2025.

"The rest of it is not covered by the tariffs."

Melrose expects 2025 revenue of 3.55-3.70 billion pounds ($4.58-$4.77 billion), below analysts’ consensus of 3.77 billion pounds. It is targeting annual revenue growth in the high single digits over a five-year period.

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"We continue to view Melrose as an attractive pureplay aerospace company, benefiting from market recovery and self-help initiatives, combined with an appealing valuation," Quilter Cheviot’s Matt Dorset said.

For 2024, Melrose reported adjusted operating profit of 540 million pounds, and revenue of 3.47 billion pounds.

($1 = 0.7757 pounds)

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