Melrose Industries, a London-listed turnaround specialist, has raised its guidance for its aerospace division for 2023 and anticipates even better performance in the coming year. This positive outlook is a result of robust trading over the past four months and a recent agreement reached with GE Aerospace.
According to Melrose, the adjusted operating profit for its aerospace unit is expected to range between £400 million and £410 million ($496.7 million-$509.1 million) this year. Looking ahead to 2024, the company forecasts an improvement to £520 million to £540 million. These figures represent an increase from the previous guidance of £375 million to £385 million for 2023.
Additionally, the unit’s adjusted operating margin is projected to exceed 12% in 2023 and rise to 15% in 2024.
Simon Peckham, the outgoing Chief Executive of Melrose, expressed his satisfaction with the company’s future positioning, saying, “It is a pleasure to hand over Melrose so well positioned for the future. 2024 will be another year of strong progress under its new leadership as the targets announced in the capital markets event come into sight.”
Melrose’s recent agreement with GE Aerospace, signed in early November, expands their revenue and risk sharing partnership on the GEnx engine program. This development is expected to boost aerospace sales by $5 billion over the next 30 years.
During the period between July 1 and October 31, Melrose reported an 18% increase in revenue driven by higher aftermarket demand and pricing, as well as operational improvements. The engines division experienced similar growth, with a revenue increase of 18% over the four-month period and adjusted operating margins exceeding 25%. Strong aftermarket trading, which rose 24%, played a significant role in this success.
CEO Simon Peckham will step down in March 2022 after serving in the role for nearly 12 years. He will be replaced by Peter Dilnot, the current Chief Operating Officer. This leadership transition aligns with Melrose’s strategic direction to become a pureplay aerospace group.
Shares of Melrose Industries were trading up 0.5% at 535.40 pence at 1157 GMT, reflecting an 87% increase year-to-date.