Melrose Industries PLC (MLSPF) Q4 2024 Earnings Call Transcript

2025-03-06 17:06:31 ET

Melrose Industries PLC (MLSPF)

Q4 2024 Earnings Conference Call

March 06, 2025 05:30 AM ET

Company Participants

Peter Dilnot - Chief Executive Officer

Matthew Gregory - Chief Financial Officer

Conference Call Participants

Sam Burgess - Citigroup

David Perry - JPMorgan

Ian Douglas-Pennant - UBS

Mark Fielding - RBC

Mark Davis Jones - Stifel

Richard Paige - Deutsche Numis

Jon Mounsey - BNP Paribas Exane

Presentation

Peter Dilnot

Well, hello, everyone, and welcome to Melrose 2024 Results. It's great to see so many of you here in London with us and I know we've got lots of others on the webcast too. So welcome to you all and thanks for joining us.

Now this is actually our third set of results as a focused aerospace technology business. 2024 was a busy and successful year for us and we've got good momentum going into 2025. And clearly we're going to cover lots of that shortly.

But importantly today, we're also announcing new five-year targets. These are built on our clear plans for our repositioned aerospace group and they also reflect our confidence and our excitement about where we're going to take Melrose from here.

So running order today is I'll give some highlights on all of this upfront and then Matthew will do 2024 and 2025 before I return to talk in more detail about these five-year targets.

Let's just get started with some headlines. Firstly, as I said, we delivered a strong performance in 2024 with profit at the top end of expectations against a backdrop of what we all know has been a difficult time in the industry with supply chain challenges. This progress continues with our positive momentum into 2025. And this year we're going to complete our multiyear transformational restructuring program and we'll also deliver substantial free cash flow.

Now on the five-year target. These include good revenue growth primarily from the market ramp-up, significant further margin expansion and ongoing step-ups in cash generation. So lots of value to unlock.

Some highlights specifically on 2024 include this 42% increase in profit to £540 million. This was delivered despite lower than expected revenue growth due to these reduced production rates. So our margin expansion was the result of business improvement actions reading through and positive aftermarket mix.

Operationally, our priority is always safety and quality. And in 2024, I'm proud to say that we delivered an 80% reduction in lost time accidents and further improvements in quality too. This is important. We also took steps to grow our business for the future, including expanding capacity on existing platforms such as the F-35, as well as investing in Engines capability such as our breakthrough additive fabrication technology, which we're going to talk through in more detail later. And, finally, our ongoing portfolio rationalization is now largely complete with the successful sale of three non-core businesses including two to Boeing.

2025 is all about further delivery and the execution of our plans. We'll see another step-up in profit and margins and we'll complete our extensive restructuring program and deliver improved productivity on our restructured, leaner operating base. Most significantly, though, we will reach an inflection point on cash with recent one-timers dropping away and moving from cash outflow in 2024 to more than £100 million positive free cash flow post interest and tax this year....

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