Melrose Industries (MRO) H1 2026 earnings summary

Executive summary

• Achieved strong H1 2026 performance with 10% revenue growth to £1,873 million and 16% operating profit increase, driven by robust demand in civil and defense aerospace markets, despite the Garden Grove incident impacting Airframes and leading to a temporary production halt and share buyback pause.

• Free cash flow improved by £67 million year-over-year to £13 million, with leverage maintained at 1.8x EBITDA.

• Strategic investments continued in breakthrough technologies, additive fabrication, and next-generation aerospace programs.

• Interim dividend increased 13% to 2.7p per share.

Financial highlights

• Group revenue up 10% year-over-year to £1.9bn; Engines division led with 19% revenue growth to £896 million.

• Operating profit rose 16% to £347 million; H1 margin increased by 50bps to 18.5%.

• Adjusted diluted EPS up 22% to 17.7p; dividend per share up 13% to 2.7p.

• Free cash flow of £13 million, a £67 million improvement year-over-year.

• Net debt at £1,530 million, leverage at 1.8x EBITDA.

Outlook and guidance

• Full-year 2026 guidance (excluding Garden Grove): revenue £3.75–£3.95 billion (circa 10% growth), operating profit £700–£750 million (16% growth), and free cash flow £150–£200 million.

• Engines expected to deliver £1,700–£1,800 million revenue and £565–£595 million adjusted operating profit; Airframes to deliver £2,050–£2,150 million revenue and £170–£190 million profit.

• Garden Grove incident expected to impact H2 revenue by £6 million per month and exceptional costs of £25–£30 million.

• Long-term free cash flow target of £600 million in 2029 reaffirmed.