Melrose ‘confident’ in profit growth despite tariff hit
Melrose said it has charted a course to “successfully mitigate” its direct exposure to US tariffs and was confident in delivering profit growth in 2025.
The owner of GKN Aerospace said on Wednesday it had explored a number of measures to reduce the impact on segments of the group unable to make use of any exemptions.
These include using mechanisms such as “drawback”, which is a refund of certain duties collected when goods are imported, alongside adjusting the supply chain and negotiating with customers and suppliers.
Melrose boss Peter Dilnot said the introduction of Donald Trump’s sweeping tariffs had created “additional complexity” across the aerospace industry.
The US aircraft manufacturer Boeing has been forced to halt deliveries to Chinese airlines amid an escalating trade war, while there is uncertainty between customers and suppliers down the supply chain over who should front the cost of additional levies.
“The situation remains fluid, and we will continue to work closely with our customers and suppliers to respond as needed,” Dilnot said.
The London-listed firm anticipates annual revenue in line with a previously guided range of between £3.55bn and £3.7bn, although this excludes any impact from tariffs.
On an adjusted basis, operating profit is expected to come in at around £700m.
In a trading update, Melrose said group revenue had risen six per cent in the first quarter, with operating profit “well ahead” of the same period last year.
Shares rose two per cent in early deals.
Dilnot added: “Melrose has established positions on all the world’s leading aircraft and underlying demand remains very strong in both our Civil and Defence markets.
“Our business improvements are reading through with more benefits to come going forwards. We are therefore confident about delivering profitable growth and significantly increasing free cash flow in 2025 and in the years ahead.”
The company will publish its interim results for the first half on 31 July.