UK's Melrose Industries lifts 2025 expectations on aerospace focus

(Reuters) - Melrose Industries Plc expects its engines business to power its profit margins in 2025 as aftermarket services would help boost cashflow, enabling it to buy back shares worth between 5% and 10% of its market value annually from next year.

The company raised its adjusted operating margin outlook for aerospace to between 17% and 18% by 2025, compared with 14% previously. The operating margin for the Engines business is expected to be 28% in 2025, compared with 22% in 2023.

Shares in Melrose, which spun out its automotive business into Dowlais last month, rose 6% by 1232 GMT, topping London's blue-chip index.

"Lifetime net cash inflows, from RRSP engines contracts, being approximately half the Engines business today, are expected to total 20 billion pounds ($25.24 billion) with a net present value of 5.5 billion pounds," Melrose said ahead of its capital markets event in London.

Melrose, which makes airframe and engine structures and electrical interconnection systems for the aerospace industry, said last week it had decided to continue as a pure-play aerospace firm.

The outlook for 2025 laid out on Wednesday divides its aerospace business into two divisions, namely engines and structures, for the first time.

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(Reporting by Eva Mathews and Yadarisa Shabong in Bengaluru; Editing by Krishna Chandra Eluri)