Melrose shares tumble as five-year targets fail to wow investors
Shares in Melrose Industries tumbled more than 13 per cent on Thursday after a new set of five-year targets failed to chime with investors.
GKN Aerospace’s owner is targeting £1.2bn in adjusted operating profit and around £5bn in revenue by 2029.
It is also looking to secure annual earnings per share growth of more than 20 per cent through the period, and expects free cash flow to more than quadruple by the same date.
The share price slide came even as annual profit topped analyst expectations amid strong demand for civil and defence aircraft.
The aerospace group on Thursday reported a 42 per cent year-on-year increase in adjusted operating profit for 2024.
Revenue was £3.5bn, up 11 per cent despite long-running supply chain challenges in the industry.
The firm, which manufacturers components and systems for aircraft, also announced plans to hike dividends by a fifth to 6p per share.
“Melrose delivered a strong 2024 performance driven by robust industry demand, ongoing aftermarket growth and the impact of extensive business improvement actions,” chief executive Peter Dilnot said.
“We are well positioned for further progress in 2025, including the expected delivery of substantial free cash flow, despite ongoing industry challenges.
“Our confidence in future growth is underpinned by market leading technologies and established positions on all the world’s major aircraft.”
Shares in Melrose have risen around 22 per cent this year to date.
The company also reaffirmed its full-year guidance on Thursday. It is currently looking at revenue of between £3.6bn to £3.7bn, and adjusted operating profit of between £680m and £720m.