Melrose Industries Plc · LSE:MRO
Melrose Industries — H1 2025 Earnings Presentation
31 slides from Melrose Industries's earnings presentation, Aug 1, 2025
Slide 1: Half Year Results, Six months ended 30 June 2025
Melrose Industries PLC Half Year Results Six months ended 30 June 2025 1 August 2025
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by or on behalf of Melrose Industries PLC (“Melrose”). The information set out in this presentation is not intended to form the basis of any contract. By attending (whether in person, by telephone or webcast) the presentation to which this document rela
Slide 3: Executing our Plan
Executing our Plan • Substantial improvements in profit and free cash flow Strong H1 • Continued strong execution despite supply chain and tariff disruption performance • Multi-year transformation programme nearing completion • On track to deliver full year guidance at constant currency • Structural
Slide 4: H1 Highlights
H1 Highlights Financial Commercial Operational 6%1 Multi-year follow-on contract with BAE Systems on 14% increase in revenue to £1.72bn Typhoon canopies Reduction in total incident rate2 29% Agreement with Archer on Midnight platform for key 22% increase in operating profit to £310m airframe compone
Slide 5: H1 2025 Results
H1 2025 Results Growth Outlook Half Year Results
Slide 6: Results Overview
Results Overview Revenue growth continues to be strong, led by the Engines division due to strength of RRSP portfolio and commercial contracts Adjusted1 Growth Continued strong execution and commercial progress in both results vs H1 divisions despite supply chain and tariff disruption £m H1 2025 202
Slide 7: Divisional Overview
Divisional Overview Growth vs H1 2024 Adjusted1 results H1 2025 Operating Operating Operating Operating £m Revenue profit margin Revenue profit margin Engines 781 261 33.4% 11% 26% 4.0ppts Structures 939 63 6.7% 3%2 32% 2.0ppts Aerospace 1,720 324 18.8% 6%2 27% 3.9ppts PLC costs - (14) n/a n/a (4%)
Slide 8: Engines: Results
Engines: Results REVENUE (£m) Revenue growth of 11% is driven by strong H1 2025 REVENUE SPLIT aftermarket growth of 15% with OE also growing by 781 7% 720 11% OE revenue growth of 7% driven by widebody engines, spare engine mix and military ducts improvement, partially offset by lower OE sales to OE
Slide 9: Structures: Results
Structures: Results REVENUE (£m) Continuing Exited businesses H1 2025 REVENUE SPLIT Revenue growth of 3%1 1,022 3%1 939 Civil revenue flat1 as expected, with growth in business jets and narrowbody offset by widebody and other platforms driven by customer supply chain issues Defence revenue up 10%1 f
Slide 10: Tariffs: Melrose's Successful Mitigation Approach
Tariffs: Melrose’s Successful Mitigation Approach US REVENUE BY ORIGIN (%)1 Exemptions in Defence, USMCA and UK agreement Changes in contractual terms of supply (“Incoterms”) North UK, Europe & America: 39% Other: 61% (£0.7 bn) (£1.1 bn) Mitigations Enacted changes in supply chain structure Other me
Slide 11: Results Overview: H1 2025 Statutory Results
Results Overview: H1 2025 Statutory Results Adjusting operating items were principally amortisation of H1 2025 H1 2024 intangibles acquired in business combinations, restructuring costs and exchange movements not hedge accounted2 Adjusted1 Statutory Adjusted1 Statutory £m results results results res
Slide 12: Free Cash Flow: Substantial Improvement
Free Cash Flow: Substantial Improvement £m H1 2025 H1 20242 Change Adjusted operating profit1 310 247 Working capital movements impacted by revenue growth and Depreciation and amortisation 67 72 seasonality Lease obligation payments (17) (19) Non-cash impact from loss-making contracts (5) (16) CAPEX
Slide 13: 2025 Guidance: Constant Currency Guidance Maintained
2025 Guidance: Constant Currency Guidance Maintained Guidance restated from $1.25 to $1.335. Assumes $1.37 for H2 Engines: Operating profit guidance of £490-£510 million, including variable FY 2025 FY 2025 consideration of £310-£340 million. Variable consideration range reduced to Group H1 2025 Guid
Slide 14: Growth Outlook
H1 2025 Results Growth Outlook Half Year Results
Slide 15: Well Positioned in Structural Growth Markets
Well Positioned in Structural Growth Markets Civil – record backlogs and growing AM Defence – step change in spending commitment 14,000 Aircraft backlogs 250 Engine flight hours (millions) 6.0 NATO defence spend (% of GDP) ~9 years CAGR of 6% 5.4 12,000 (2025-2030) 3.5% CORE + 1.5% broader defence =
Slide 16: Unique Portfolio Locks-in Growth
Unique Portfolio Locks-in Growth Civil Defence • Design-led positions on all major civil aircraft 66%2 • LTAs4 on major rotary and fixed wing platforms 34%2 • Global reach with Airbus, Boeing and COMAC • Significant presence on high value F-35 Structures ~£2bn • Key European platforms such as Typhoo
Slide 17: Melrose Growth Strategy
Melrose Growth Strategy Deliver growth from Expand in targeted Participate in existing platforms new opportunities next generation aircraft • Production ramp-up • Engines additive fabrication • Next generation engines • Increasing returns from RRSPs • Advanced air mobility • Future single aisle • En
Slide 18: Leading Aerostructures Business
Leading Aerostructures Business Composite structures EWIS Transparencies Metallic structures Embedded Design-led on all high- capability volume aircraft 68% Extensive Content Portfolio Progress update Narrowbody A320 £0.5m • Sustainably priced 85% of defence portfolio ahead of plan A220 £0.9m • Comm
Slide 19: Unmatched Engines Business Partnering all OEMs
Unmatched Engines Business Partnering all OEMs RRSP Commercial Contracts Parts Repair Governmental Four Powering technology- c.70% of led global flying businesses hours Engines in service and Melrose RRSP share Progress update PW1100G PW1500G/1900G New NB (GTF) PW1100G 2025-2034: 3,800 Growth +291%
Slide 20: Delivering Operational and Commercial Excellence
Delivering Operational and Commercial Excellence 2023 2025 2029 Group operating ~12% 18%+ 24%+ margin Multi-year transformational restructuring to Foundations established to leverage finish in 2025 repositioned business • Global footprint rationalisation from 521 sites to 32 • Delivering OE and afte
Slide 21: Differentiated Technology With Commercial Traction
Differentiated Technology With Commercial Traction Additive Fabrication Military Uncrewed China Growth Advanced Air Mobility • 100% serial production of Fan • Development of unmanned air • COMAC JV ramping up volumes • Design agreement with Archer for Case Mount Ring by end of 2025 vehicles for loca
Slide 22: Melrose Year Targets
Melrose 5 Year Targets 1 2 Revenue Operating Profit Free Cash Flow ~£5bn £1.2bn+ £600m 3 HSD CAGR Margin up to 24%+ And growing beyond All financial targets for the year ended 31 December 2029 assume an FX rate of US $1.25:£1 1. Adjusted operating profit 2029 target is post PLC costs 2. After intere
Slide 23: Clear Path to £600 million Free Cash Flow in 2029
Clear Path to £600 million Free Cash Flow in 2029 Free Cash Flow drivers and assumptions • Profit drop-through from civil ramp revenue growth Improving trade working capital efficiency • Defence growth, benefitting from repriced portfolio Structures • Efficiencies from streamlined footprint and Bril
Slide 24: Executing Our Plan
Executing Our Plan • Substantial improvements in profit and free cash flow Strong H1 • Continued strong execution despite supply chain and tariff disruption performance • Multi-year transformation programme nearing completion • On track to deliver full year guidance at constant currency • Structural
Slide 25: Appendices
Appendices Melrose
Slide 26: Reconciliation Between Statutory and Adjusted Results
Reconciliation Between Statutory and Adjusted1 Results Continuing operations Cash spent £m Total in H1 2025 Statutory operating profit 441 Amortisation of intangible assets acquired in business combinations 127 - Exchange movements not hedge accounted (267) - 1 Restructuring costs 12 (17) Net change
Slide 27: Reconciliation of Net Debt
Reconciliation of Net Debt1 Reconciliation of net debt1 (£m) H1 2025 Net debt1 at 1 January 2025 (1,321) Free cash flow1 (54) Dividends paid (51) Share buybacks (71) Net acquisition and disposal related cash flows 4 FX and other non-cash movements 94 Other (5) Net debt1 at 30 June 2025 (1,404) Addit
Slide 28: Some Helpful Data
Some Helpful Data FY 2025 Guidance FY 2025 Guidance Income Statement H1 2025 (updated for $1.335) Cash Flow H1 2025 (updated for $1.335) Revenue: Depreciation: Owned assets £52 million £115 million Engines £781 million £1,525-1,575 million Leased assets £15 million £30 million Structures £939 millio
Slide 29: Some Helpful Data: 2029 at $1.25
Some Helpful Data: 2029 at $1.25 Income Statement 2029 Targets1 Cash Flow 2029 Targets1 Revenue: Depreciation: Engines HSD2 CAGR3 Owned assets c.£135 million Leased assets c.£35 million Structures MSD2 CAGR3 Total depreciation c.£170 million Melrose Group c.£5 billion Variable consideration c.£500 m
Slide 30: Historical Variable Consideration Table
Historical Variable Consideration Table £m 2018 2019 2020 2021 2022 2023 H1 2024 2024 H1 2025 Income Statement: RRSP Sales 415 679 354 402 547 680 428 859 485 Balance Sheet: Unbilled work done – brought forward 171 206 242 247 305 450 595 595 922 Add: variable consideration 28 60 26 44 105 136 102 2
Slide 31: Foreign Exchange Environment: Transactional Hedging Position
Foreign Exchange Environment: Transactional Hedging Position1 EUR:USD 2025 2026 2027 2028 2029 2030 Transaction FX exposures and approach (figures in USD) Exposure in $m 662 568 505 393 379 66 • Main currency pairs are EUR:USD and GBP:USD • Additional SEK and NOK hedged vs USD1 Hedged 96% 82% 72% 56