Melrose shares slide 13% despite strong 2025 results and dividend boost

Core Viewpoint - Melrose Industries PLC reported strong financial growth for 2025, with an 8% increase in revenue to £3.59 billion, but experienced a 13% decline in share price despite announcing a dividend increase and a £175 million share buyback program [1][4]. Financial Performance - Adjusted operating profit rose 23% to £647 million, with the adjusted operating margin increasing by 240 basis points to 18% [2]. - Statutory operating profit in the aerospace and defense sector reached £600 million, a significant recovery from a £4 million loss in 2024 [2]. - Adjusted profit before tax increased by 21% to £515 million, while statutory profit before tax was £468 million, compared to a £106 million loss the previous year [2]. - Adjusted diluted EPS rose 25% to 32.1p, with statutory EPS at 29p, up from a loss of 3.7p in 2024 [2]. Cash Flow and Debt - Free cash flow after interest and tax totaled £125 million, an increase of £199 million year-on-year, while net debt stood at £1.41 billion, representing a leverage ratio of 1.8x [3]. - The board proposed a final dividend of 4.8p per share, bringing the total annual dividend to 7.2p, a 20% increase from 2024 [3]. Future Outlook - For 2026, Melrose anticipates revenue between £3.75 billion and £3.95 billion, adjusted operating profit of £700 million to £750 million, and free cash flow of £150 million to £200 million, with expectations weighted towards the second half of the year [4].