British aerospace supplier Melrose’s CEO and co-founder Simon Peckham will step down in March after more than 20 years and be replaced by Chief Operating Officer Peter Dilnot, it said on Thursday, paving way for new leadership as it changes course.
The owner of GKN (LON:GKN) Aerospace, publishing its first set of results after completing the spin-off of Dowlais Group in April, also announced a 500 million pound ($625 million) share buyback and lifted its full-year profit expectations on higher than expected margins at its engines division.
Shares in the company jumped 8% in early trade to their highest since February 2020.
Melrose, known as a turnaround specialist with a strategy under Peckham of buying and selling manufacturing businesses, is now a pure-play aerospace group.
It has no plans to buy new businesses in other sectors or a material one in the aerospace industry in the near term, it said.
“The company believes that this is the right time to begin evolving the executive management team to progress the changed strategy,” it said.
Finance Director Geoffrey Martin, who has been with the group for more than 18 years, will also be replaced by Matthew Gregory, currently finance chief of GKN Aerospace.
“Melrose is flying into markedly improved conditions and, although change at the top can be unsettling, the ready replacements for the CEO and group finance chief will limit turbulence,” said Hargreaves analyst Susannah Streeter.
Dilnot, a former executive at Danaher Corp (NYSE:DHR), became COO in 2019. He was a helicopter pilot in the British Armed Forces, with a degree in mechanical engineering.
Under Peckham, Melrose acquired GKN – one of the UK’s oldest engineers – in 2018 through an 8 billion pound hostile bid. Last year it announced plans to break it up by spinning off GKN’s automotive, hydrogen and powder metallurgy businesses.
Melrose’s adjusted pretax profit from continuing operations was 134 million pounds for the six months to June 30, compared with 9 million pounds a year earlier.
The company, which makes airframe and engine structures and counts Airbus (OTCMKTS: EADSF) and Boeing (NYSE:BA) as its top customers, now expects full-year adjusted operating profit between 375 million pounds and 385 million pounds, up about 8% from a forecast in May.
($1 = 0.7999 pounds)
