Melrose Industries (LSE:MRO) delivered a strong performance in 2025, with revenue increasing 8% to £3.59 billion and adjusted operating profit rising 23% to £647 million, lifting operating margins to 18%. Free cash flow improved significantly, reaching £125 million compared with a £74 million outflow in the prior year, while leverage remained within the company’s target range at 1.8x net debt to EBITDA.
The Engines division was the primary growth driver, recording a 15% rise in revenue and a 27% increase in adjusted operating profit, supported by solid demand across both original equipment and aftermarket activity, as well as variable income from risk-and-revenue-sharing agreements. Within Airframes, like-for-like revenue grew 3%, while adjusted operating profit increased 10%, aided by strong defence programme activity despite weaker civil aerospace volumes and some operational productivity challenges.
Melrose also completed its multi-year transformation programme, citing measurable gains in quality and efficiency. The group highlighted several defence and advanced air mobility contracts and partnerships that are strengthening its long-term commercial outlook. A £175 million share buyback programme has been launched, alongside a proposed 20% increase in the final dividend, signalling management confidence as the company targets further revenue, profit, and cash flow expansion in 2026 on its path toward 2029 strategic objectives.
Despite improved operational delivery, the company’s broader outlook remains influenced by financial performance pressures, including periods of revenue volatility and historically negative cash flow trends. Technical indicators present mixed signals, with some bearish momentum balanced by neutral factors, while valuation metrics appear moderate and dividend yield remains relatively modest. Positive corporate actions such as buybacks and leadership initiatives provide support but do not fully offset these challenges.
More about Melrose
Melrose Industries is a UK-listed global aerospace technology group operating through its Engines and Airframes divisions across civil and defence aviation markets. The company serves as a “Super-Tier 1” supplier to major airframe and engine manufacturers, providing design-led, flight-critical components including full engine systems, large structural assemblies, and complete aircraft electrical wiring systems for high-volume aircraft programmes worldwide.
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