Melrose Industries PLC (LSE:MRO, OTC:MLSPF) shares fell 3.5% to 458.8p after the aerospace and defence group warned of further exceptional costs linked to a chemical tank incident at its Garden Grove facility in the US.
The company said it expects to incur additional exceptional costs of between £25 million and £30 million in the second half of 2026 as it continues its response to the incident, including regulatory and legal processes.
Melrose has paused its £175 million share buyback programme while it assesses the full financial impact of the incident. The company said its insurance position is also under review.
The Garden Grove facility has returned to partial production following the incident in May and is expected to operate at around 50% of normal capacity until full production resumes. Melrose said the incident reduced first-half revenue by 16.00 million and adjusted operating profit by 9.00 million.
Despite the impact, Melrose reported a 10% increase in first-half revenue to £1.87 billion and a 16% rise in adjusted operating profit to £347 million. Adjusted operating margin improved to 18.5%, while free cash flow increased by £67 million to an inflow of £13 million.
Chief executive Peter Dilnot said: "We are managing the situation at our Garden Grove transparencies site following the incident in May. Partial production has since resumed, and we will continue to work closely with customers, regulators and other authorities to safely restore the site to full production in the second half."
The company maintained its full-year guidance excluding the impact of Garden Grove. It expects revenue of between £3.75 billion and £3.95 billion, adjusted operating profit of between £700 million and £750 million, and free cash flow after interest and tax of between £150 million and £200 million.
