Melrose Industries (MRO) H2 2025 earnings summary

Executive summary

• Achieved strong 2025 performance with 8% revenue growth to £3.6bn and 23% increase in operating profit to £647m, driven by Engines and Defence segments.

• Completed multi-year transformation, focusing on core aerospace and defense, exiting non-core businesses, and rationalizing footprint from over 50 to around 30 sites.

• Delivered positive free cash flow of £125m, a £199m improvement year-over-year, marking a key inflection point.

• Announced a new £175 million share buyback program, reflecting confidence in achieving 2029 targets.

• Positioned for growth with strong demand across civil and defense, record order backlogs, and leading positions on major aircraft and engines.

Financial highlights

• Group revenue up 8% year-over-year to £3,589m, led by 15% growth in Engines and 3% in Airframes.

• Operating profit rose 23% to £647m; margins up 240bps to 18%.

• EPS increased 25% to 32.1p per share; final dividend proposed at 4.8p, full-year up 20% to 7.2p.

• Free cash flow of £125m, £200m higher than prior year, with strong trade working capital performance.

• Net debt at £1,407m, leverage at 1.8x net debt/EBITDA.

Outlook and guidance

• 2026 revenue guidance: £3.75–£3.95bn (midpoint ~10% growth), with Engines driving growth.

• Operating profit guidance: £700–£750m (midpoint ~16% growth), margin ~19%.

• Free cash flow guidance for 2026: £150–£200m, weighted to H2; leverage to remain below 2.0x.

• Targeting £5bn revenue, 24%+ operating margin, £1.2bn+ operating profit, and £600m free cash flow by 2029.

• Committed to growing annual dividend and launching a £175m share buyback.