First-half adjusted revenue rose 10% to £1.9bn (£1.8bn expected). The Engines division grew at the fastest pace, up 19%, driven by strong engine sales and aftermarket demand. Airframes revenue grew 4%.
Adjusted operating profit grew by 16% to £347mn (£342mn expected). This was driven by top line growth and operational improvements in Engines, more than offsetting costs linked to one of its chemical tanks overheating at Garden Grove in the US.
Free cash flow improved from an outflow of £54mn to an inflow of £13mn. Net debt rose by £0.1bn to £1.5bn.
Excluding the impact of Garden Grove, full-year guidance remains unchanged. Adjusted revenue is expected to land between £3.75bn and £3.95bn, with adjusted operating profit in the £0.70bn-£0.75bn range.
The shares fell 4.0% in early trading.
Our view
HL view to follow.
Melrose key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.