Melrose Industries has seen its share price drop by 11% in early trading, despite seeing its year-on-year revenue increase by the same amount.

In the year to 31 December 2024, the Birmingham-based aerospace firm saw its revenue reach £3.5bn, while its profit before tax increased by 36% to £438m, which is at the top end of its expectations, after "industry-wide supply chain issues".

Furthermore, its operating profit increased by 38% to £566m, which again was at the top end of expectations.

The firm said that its net debt increased to £1.3bn, which represents leverage of 1.9 times and is in line with expectations and its target range of 1.5-2 times.

Melrose has also reached a final dividend of four pence per share, an increase of 14% annually and takes its total dividend to six pence, a 20% year-on-year jump.

Chief executive officer at Melrose, Peter Dilnot, said: "Melrose delivered a strong 2024 performance driven by robust industry demand, ongoing aftermarket growth and the impact of extensive business improvement actions. This was achieved against the backdrop of ongoing industry-wide supply chain issues.

"We are well positioned for further progress in 2025, including the expected delivery of substantial free cash flow, despite ongoing industry challenges.

Looking ahead to 2025, the firm expects revenue to reach between £3.55bn and £3.7bn, with growth "moderated by ongoing industry-wide supply chain issues with greater impact on structures".

It also expects its operating profit to maintain at the midpoint of £700m, with a range of £680m and £720m.

As part of its five-year target, Melrose is targeting revenue of £5bn by 2029, reflecting on its current customer build rate and industry flying hours forecasts.

It also is expecting to reach an operating profit of over £1.2bn within this time.

Investment director at AJ Bell, Russ Mould, added: "It is often better to travel than arrive, and so it proved for aerospace engineer Melrose Industries as investors took profit despite a strong set of numbers which beat analysts’ expectations.

"The company has been pulled higher in Rolls-Royce’s tailwind amid recovering demand in the civil aviation space. The market reaction may reflect some disappointment about the company’s five-year targets, even if they do suggest a reasonable level of ambition on the part of management."

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