London, February 27, 2026, 11:21 GMT — Regular session
- Melrose shares dropped after the company signaled it expects lower revenue in 2026.
- Despite a solid 2025 performance, supply-chain snags and doubts around tariffs took the spotlight.
- The group has increased its dividend and rolled out a new share buyback programme.
Shares of Melrose Industries PLC slid 13.4% to 554 pence as of 11:06 GMT Friday, putting the GKN Aerospace parent at the bottom of the FTSE 100. The stock touched a session low of 536.8 pence after investors balked at the company’s guidance for 2026.
This slide is grabbing attention because aerospace suppliers are being judged on their ability to convert historic demand into actual shipments—not on last year’s recovery. Melrose cited ongoing supply-chain snags and uncertainty linked to U.S. trade policy, and put its 2026 revenue outlook at 3.75 billion to 3.95 billion pounds, trailing the 4.01 billion analysts penciled in. Chief Executive Peter Dilnot told Reuters that chokepoints at Airbus, Pratt & Whitney and GE remain the biggest headache for meeting orders.
Melrose said 2025 revenue was up 8% to 3.589 billion pounds, with adjusted operating profit jumping 23% to 647 million pounds. Free cash flow came in at 125 million pounds. The company also set out plans for a fresh 175 million pound share buyback, targeting completion by end-March 2027. The final dividend moves 20% higher to 4.8 pence per share, due May 5 for holders recorded as of March 20 close.
Melrose is positioning as a focused aerospace and defence supplier, manufacturing engine and airframe parts via GKN Aerospace. Increasingly, profits are being driven by the “aftermarket” — essentially, repairs and spare parts for planes already in service. That business is typically more stable than revenue from new aircraft production.
The action Friday underscored just how fast “guidance” can overshadow headline earnings. Hopes around smoother production ramps are still in play, but behind the scenes, the process remains tangled. Even minor hiccups at major planemakers can cascade.
This week, other UK aerospace stocks have told a different story. Rolls-Royce jumped the previous day, buoyed by a raised outlook and a new 2026–2028 buyback plan, setting the tone ahead of Melrose’s results.
Melrose put it less bluntly—demand’s not the issue, it’s whether capacity can keep up. Investors, meanwhile, are left weighing tariff risks and unpredictable trade tensions that reshuffle costs before contracts even catch up.
Risks here aren’t subtle—and they’re hardly minor. Ongoing shortages or shaky build rates at key customers could push deliveries into future quarters, squeezing margins as suppliers shell out more for labor, parts, and rush shipping.
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