By Anthony O. Goriainoff
Melrose Industries said that it was performing ahead of expectations, and raised its aerospace guidance for the year as the margin was substantially better than expected.
The London-listed turnaround specialist said Thursday that this performance was driven by higher aftermarket demand and pricing, as well as operational improvements.
The company said that revenue rose 18% for the July 1 to Oct. 31 period and that underlying demand was higher. It added that due to the delivery of stronger underlying margins 2023 profit expectations were raised 7%, more than doubling profits when compared to the year before.
“This reflects ongoing confidence in the performance of the business with Engines full year margins now expected to be 25% and Structures margins 4% or more,” it said.
Revenue at its engines division continued to grow at 18%, with adjusted operating margins in excess of 25%, it said. The company said this strong performance was driven partly by strong aftermarket trading, which rose 24%.
For 2023, the company expects adjusted operating profit at the aerospace division to be in the 400 million pounds to 410 million pounds range ($496.7 million to $509.1 million), up from a previous guidance of GBP375 million to GBP385 million. Group revenue is seen at GBP3.3 billion-GBP3.4 billion.
Melrose said that for 2024 it expects to report revenue between GBP3.5 billion and GBP3.7 billion. At the aerospace division it expects to report adjusted operating profit in the GBP520 million to GBP540 million range, and an adjusted operating margin of around 15%.
“Significant operational improvements are on track in both Engines and Structures to enhance margins further,” it said.
Shares at 0822 GMT were up 6 pence, or 1.1%, at 538.60 pence.
Write to Anthony O. Goriainoff at [email protected]