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(Sharecast News) - Melrose Industries lifted its annual outlook on Thursday as it said trading has been ahead of expectations, partly due to higher-than-expected margins at the engines division.
In the six months to 30 June, adjusted pre-tax profit jumped to £134m from £9m in the same period a year earlier, with revenues up to £1.6bn from £1.4bn.
Melrose said the aerospace business performed well during the period and that the engines division exceeded its margin guidance "and continues to demonstrate exceptional profit growth and long-term cash flows".
The company, which spun off automotive engineer Dowlais in April, upgraded its guidance for 2023. Revenue is expected to be between £3.35bn and £3.45bn, while the aerospace adjusted operating profit range was increased by more than 8% to between £375m and £385m, with a higher engines margin than previously guided.
Aerospace adjusted EBITDA is now set to be £525m to £535m, Melrose said.
The company also said it was bringing forward the start of its £500m buyback programme to October.
Chief executive Simon Peckham said: "We are delighted with these results and the outlook for Melrose. Whilst there is still work to do, the business is very capable of producing over £1bn of EBITDA and providing excellent returns for shareholders. This is further demonstrated by the confidence to start early the share buyback programme."
Melrose also announced that, in line with its new strategic direction after the Dowlais spinoff, chief executive and co-founder Simon Peckham and group finance director Geoffrey Martin will step down on 7 March 2024. They will be replaced by chief operating officer Peter Dilnot and chief financial officer for GKN Aerospace Matthey Gregory, respectively.
At 0815 BST, the shares were up 7.7% at 548.20p.
