Melrose Industries PLC (LSE:MRO, OTC:MLSPF) shares tumbled 7.5%, even though the GKN Aerospace owner's profits beat expectations and guidance was maintained for this year.
However, due to supply chain "challenges" and disposals, 2025 revenue guidance was trimmed, though operating profit margin guidance was increased to keep expected earnings unchanged.
Results for the first half of 2024 were ahead of expectations, with adjusted operating profit up 62% to £247 million on revenue up 7% to £1.74 billion.
Operating profit margin at Aerospace rose to 14.9% from up 9.7% the prior year, with the Engines and Structures divisions also making progress.
A further £250 million share buyback was announced today, while the group promised to invest more in organic growth and keep debt leverage between 1.5-2 times profit.
The shares fell to 545p, dropping back after gaining more than two-thirds over the past two years.
Analysts at Peel Hunt said: "Some may find it disappointing that there is no increase in guidance, especially considering GE and RTX’s performance this reporting season."
"The rationale is that the well-documented broader supply chain issues in the industry will likely impact [the second half]."
In light of this, Melrose has revised its 2025 revenue expectations down from £4.0 billion to £3.8 billion, with the majority of the reduction in Structures, though EBITA guidance remains unchanged at £700 million.