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(Sharecast News) - Melrose Industries lifted its full-year profit outlook on Thursday, as it highlighted stronger aftermarket demand and pricing.
In an update for the four months to the end of October, Melrose said trading was ahead of expectations, with revenue growth of 18%, and underlying demand higher.
In addition, the margin performance was "substantially better" than expected, driven by higher aftermarket demand and pricing, and the successful delivery of operational improvements.
The company said that due to the stronger underlying margins being achieved, 2023 full-year profit expectations have been upgraded by 7%, which will mean profits more than doubling on the previous year.
"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.
For 2023, it expects revenue of £3.3bn to £3.4bm, aerospace adjusted operating profit of between £400m and £410m and aerospace adjusted operating margin over 12%. Adjusted EBITDA was seen at between £545m and £555m.
The company also upgraded its expectations for 2024, saying results would now be 4% ahead of market views. Revenue was seen at between £3.5bn and £3.7bn, while aerospace adjusted operating profit was expected to come in between £520m and £540m.
Aerospace adjusted operating margin was expected at around 15% and adjusted EBITDA at £680m to £700m.
"These higher expectations for 2023 and 2024 announced today, along with the recent signing of the new GE deal announced on 6 November 2023, show the guidance given in the Capital Markets Event on 17 May 2023 is being exceeded and the stated 2025 profit targets are substantially more underpinned than before," it said.
