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Summary
- Melrose Industries PLC had reported a decline of 20.03% in statutory revenue during FY20.
- MRO had reported a reduction of 27% in its aerospace division revenue during FY20.
- MRO had generated an adjusted free cash flow of £628 million during FY20.
- MRO does not anticipate significant recovery for its aerospace segment in 2021 as well.
Melrose Industries PLC (LON:MRO) is the LSE listed industrial stock. MRO’s shares have generated a return of approximately negative 12.71% in the last 12 months. It is listed on the FTSE 100 Index. The Company was incorporated in 2015.
Business Model
Melrose Industries PLC is a UK-based Company, which owns manufacturing and industrial business with a leading market position operating across several geographies. The Company's reportable business segments are -
- Aerospace
- Automotive
- Powder Metallurgy
- Nortek Air Management
- Other industrial division
(Source: Company website)
Recent News
On 04 January 2021, MRO updated that Peter Dilnot was appointed as an Executive Director with effect from 01 January 2021.
FY20 Financial and Operational Highlights (for the period ended on 31 December 2020, as of 04 March 2021)
(Source: Company result)
- The statutory revenue of MRO had dropped by 20.03% from £10,967 million during FY19 to £8,770 million during FY20.
- The four business segments besides Aerospace, delivered growth in revenue during H2 FY20 as compared to an equivalent period of 2019.
- Moreover, MRO had reported a statutory operating loss of negative £338 million during FY20, while it had reported a statutory operating profit of £318 million during FY19.
- Furthermore, the adjusted free cash flow rose by 6% to £628 million during FY20, driven by favorable working capital movements. However, it does not include restructuring cost in the amount of £172 million.
- Meanwhile, the Company had managed to reduce the net debt from £3.28 billion as of 31 December 2019 to £2.85 billion as of 31 December 2020 due to the strong cash generation during the period.
- On an optimistic note, the Company had reinstated dividend payments and declared a final dividend of 0.75 pence per share during FY20 on account of robust cash generation.
FY20 Segmental Highlights (as on 04 March 2021)
(Source: Company presentation)
- Nortek Air Management had demonstrated strong trading performance during FY20 and witnessed a year-on-year sales growth of 5%. The sale process for Nortek Air Management was initiated, but the disposal is not inevitable yet.
- Meanwhile, the Automotive and Powder Metallurgy business segment had shown substantial recovery during the second half of 2020.
- The sales for the aerospace division went down by 27% during FY20 as compared to FY19 levels.
Share Price Performance Analysis of Melrose Industries PLC
(Source: EODHD/Others, chart created by Kalkine group)
Shares of Melrose Industries PLC were trading at GBX 180.70 and were up by close to 2.12% against the previous closing price as on 04 March 2021 (before the market close at 11:29 AM GMT). MRO's 52-week Low and High were GBX 72.00 and GBX 216.50, respectively. Melrose Industries PLC had a market capitalization of around £8.60 billion.
Business Outlook
The Company had managed to deliver a decent financial performance during FY20 despite several business challenges that emerged from the Covid-19 pandemic. However, the aerospace sector was most adversely impacted by the Covid-19 pandemic. MRO highlighted that the aerospace industry would not witness a substantial recovery even during 2021. Moreover, for the automotive division, the driveline business would continue to strengthen MRO’s industry-leading position by delivering high margins and robust revenue growth. Furthermore, the Powder Metallurgy division would witness rising investments across business units such as Additive Manufacturing and sustainable hydrogen systems. The positive momentum built for the Nortek Air Management division during H2 FY20 would continue to persist in FY21 as well. Overall, MRO is well-positioned to achieve sustainable business growth through operational excellence.
