Melrose Industries Plc (LON:MRO) reported interim results for the six months ended 30 June 2026, with revenue up 10%, adjusted operating profit up 16% and adjusted operating margin up 50bps at 18.5%.
Group highlights1
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Good first half performance with growth in revenue of 10%, adjusted operating profit2 up 16% and adjusted operating margin2 up 50bps at 18.5% (2025: 18.0%) |
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Strong revenue growth of 19% in Engines driven by both OE and aftermarket, with Airframes revenue up 4% driven by Defence |
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Free cash inflow2 of £13 million, an improvement of £67 million; factoring balance £9 million lower at £387 million (31 December 2025: £396 million) |
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Group leverage2 at 1.8x, in line with the position at 31 December 2025 |
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Our lean operating model, Brilliant Basics, is driving improvements in inventory management and manufacturing productivity |
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Garden Grove facility in the US back to partial production following chemical tank incident at the end of May; working closely with relevant authorities and customers to safely resume full production |
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Current £175 million share buyback programme paused pending clarification of financial impact of the Garden Grove incident, including from ongoing regulatory and legal processes |
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Increase in interim dividend per share to 2.7 pence (2025: 2.4 pence), growth of 13% |
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Excluding the impact of Garden Grove, our guidance for the full year remains unchanged |
Adjusted2 results | Growth1 | Statutory results | |||
| 2026 | 2025 | 2026 | 2025 | ||
| £m | £m | £m | £m | ||
| Revenue | 1,873 | 1,720 | 10% | 1,873 | 1,720 |
| Operating profit | 347 | 310 | 16% | 154 | 441 |
| Operating margin % | 18.5% | 18.0% | 50bps | ||
| Profit before tax | 282 | 248 | 18% | 89 | 379 |
| Diluted earnings per share (p) | 17.7p | 15.1p | 22% | 6.0p | 22.2p |
| Dividend per share (p) | 2.7p | 2.4p | 13% | 2.7p | 2.4p |
| Free cash flow2 | 13 | (54) | +£67m | n/a | n/a |
| Net debt2 | 1,530 | 1,407 | n/a | n/a | |
| Leverage2 | 1.8x | 1.8x | n/a | n/a | |
Net debt and leverage comparative information as at 31 December 2025.
Peter Dilnot, Chief Executive Officer of Melrose Industries PLC, today said:
“We delivered a good performance in the first half, building on the momentum from last year, with operating profit up 16% and a strong improvement in free cash flow. This was underpinned by good commercial and technology progress, combined with operational improvements through our Brilliant Basics lean operating model.
We are managing the situation at our Garden Grove transparencies site following the incident in May. Partial production has since resumed, and we will continue to work closely with customers, regulators and other authorities to safely restore the site to full production in the second half.
Our clear growth strategy is underpinned by attractive end markets, differentiated technology and established positions on the world’s leading civil and defence aircraft. We have positive momentum and are confident about delivering sustained increases in profit and cash flow in the years ahead.”
Financial highlights1
● Revenue of £1,873 million, 10% growth on the prior year
● Adjusted operating profit2 up 16% to £347 million (2025: £310 million) with adjusted operating margin2 up 50bps to 18.5%
● Statutory operating profit of £154 million (2025: £441 million) impacted by unrealised losses on foreign exchange derivative contracts
● Incident at Garden Grove facility in May reduced revenue by £16 million and adjusted operating profit2 by £9 million
● Free cash flow2 improved by £67 million with an inflow of £13 million (2025: outflow of £54 million); factoring balance £9 million lower than at the end of December 2025
● Adjusted diluted EPS2 of 17.7p compared to 15.1p in 2025 representing growth of 22%. Statutory diluted EPS of 6.0p (2025: 22.2p)
● Net debt2 of £1,530 million, representing leverage2 of 1.8x
● Interim dividend of 2.7 pence per share, an increase of 13% on prior year
Divisional highlights1
Engines
● Revenue up 19% to £896 million with adjusted operating profit2 up 21% to £303 million, with strong growth in OE and aftermarket of 23% and 15% respectively
● Adjusted operating margin2 up 40bps at 33.8%
● Continued strong OEM order intake for new aircraft supporting our multi-year order backlog for engine components
● Adjusted operating profit2 included £206 million (2025: £182 million) of variable consideration from RRSP contracts
● Multi-year contracts signed for fan blade repairs with Rolls-Royce and Pratt & Whitney
● Ongoing investment in capacity and capability at our Trollhättan site in Sweden to support the ramp in new engines
● Expansion of North Charlestown facility to strengthen engine component manufacturing capabilities
● Encouraging progress on additive fabrication with a number of development agreements including: Pratt & Whitney to explore the manufacture of F135 components; an order for GE Industrial Gas Turbine technology insertion; and Pratt & Whitney to perform engine component repairs
Airframes
● Revenue growth of 4% to £977 million reflecting strong growth in Defence of 14% with Civil 1% lower
● Adjusted operating profit2 of £62 million was 1% lower than the comparative period with a reduction in adjusted operating margin2 of 40bps to 6.3%, reflecting lower volumes at Garden Grove; adjusted operating margin2 of 7.2% excluding Garden Grove impact
● Civil backlog underpinned by strong orders for new aircraft across Airbus and Boeing platforms, with Airbus orders up 80%
● Following the production transfers outlined at the full year results, output and productivity have improved significantly in the Netherlands
● Strong Defence momentum with continued demand for our lightweight aerostructures and advanced manufacturing capabilities:
o Working closely with Engines to develop an uncrewed aerial vehicle demonstrator for the FMV in Sweden
o Continuing to support Anduril following the UK Ministry of Defence’s decision to shortlist the company for the next phase of Project NYX for the British Army
o Design and delivery of flight-ready structural components for BAE Systems’ Collaborative Combat Aircraft (CCA) prototype, Brontanax
Garden Grove
● Financial impact in the first half was to reduce revenue and adjusted operating profit2 by £16 million and £9 million respectively
● Excluding this impact, Group revenue and adjusted operating profit2 grew by 11% and 19%, with margins 80 bps higher
● In addition, £13 million of exceptional costs were incurred in the first half relating to the initial incident response, recovery and associated advisory costs
● The incident resulted in free cash flow2 being £7 million higher than expected, with exceptional cash costs more than offset by the unwind of working capital at the site
● We are working closely with our customers and the relevant authorities to confirm the timing of resumption of full production, with the site expected to produce at around 50% of its normal capacity until then, reducing monthly revenue, operating profit and cash by c.£6 million
● As well as the financial impact from operating at reduced capacity, we currently anticipate incurring additional exceptional costs of between £25 million and £30 million in the second half
● The Group is cooperating with regulators and lawyers across a number of enquiries, investigations and legal cases. These cases are complex and at this point the outcomes are uncertain. The Group is also assessing a potential compensation programme to reimburse local residents and businesses. Our associated insurance position is under review
● Consequently, we have taken the decision to pause the current £175 million share buyback programme pending clarification of the impact
● A further update will be provided on the total expected financial impacts for the full year, and potentially beyond, in due course
Guidance for 2026 full year
Excluding the impact of the Garden Grove incident, our guidance for the full year, which assumes an average exchange rate of 1 GBP = US$1.37, is unchanged:
● Revenue between £3,750 million and £3,950 million
● Adjusted operating profit2 of between £700 million and £750 million, reflecting an adjusted operating margin2 of c.19% at the mid-point
● Variable consideration of between £340 million and £380 million
● Free cash flow2 after interest and tax of £150 million to £200 million
● Factoring utilisation expected to increase in line with Group revenue growth, generating a net cash inflow of between £30 million and £50 million which is included within the free cash flow2 guidance for the year
