S& P 500 hits all time highs U.S.-Japan trade deal optimism
Investing.com -- Shares of Melrose Industries PLC (LON:MRON) fell by 12% Thursday as the market responded to the company’s second-half 2024 performance, which showed a significant sales miss compared to consensus estimates.
Despite reporting a slight increase in earnings before interest, taxes, and amortization (EBITA) and maintaining profit guidance for FY25, the lower-than-expected sales figures appeared to overshadow the positive aspects of the report.
In the second half of 2024, Melrose’s group sales amounted to £1.73 billion, falling short of the consensus estimate of £1.82 billion by 5.1%. Although the group’s EBITA before central costs came in at £306 million, surpassing the consensus by 2.7%. This achievement was not enough to mitigate investor concerns over the revenue shortfall.
The company’s EBITA margin for H2 2024 was reported at 17.7%, which was above the consensus estimate of 16.4%. Group earnings per share (EPS) stood at 14.5p, and the dividend per share (DPS) was reported at 4.0p.
Year-end net debt was in line with consensus and indicating leverage of 1.1 times.
Looking forward, Melrose has set ambitious five-year targets that surpass expectations, with projected revenue at £5 billion compared to a consensus of £4.88 billion and a profit post central costs of £1.2 billion, which would represent a 24% margin versus the consensus of 21%. The group’s free cash flow (FCF) guidance of £600 million also exceeded consensus estimates.
For FY25, the company’s management is maintaining its profit guidance before central costs at £700 million at the midpoint, consistent with consensus estimates.
However, due to lower Airbus volumes, revenue guidance has been adjusted to £3.625 billion at the midpoint, compared to a consensus of £3.765 billion, resulting in an anticipated margin of 19.3% versus the consensus of 18.5%.
"Despite an H2 rev. miss vs. cons, H2 EBITA pre central costs was +3% vs. cons, while FY25 EBITA guidance pre central costs at the midpoint has been maintained (margin ahead). 5-year targets are above consensus and equate to a strong EPS CAGR of >20% over the period," Barclays (LON:BARC) analysts wrote in a note.