Melrose Industries on July 31 said it anticipates additional costs of between £25 million and £30 million in the second half of 2026 stemming from an incident at its GKN Aerospace Garden Grove facility in California in May.
The company reported that an overheating chemical tank at the Garden Grove site prompted an emergency response and temporary evacuation orders. Melrose supplies components to major airframe manufacturers and said the incident lowered first-half revenue by £16 million and trimmed adjusted operating profit by £9 million.
For the six months to June, Melrose recorded adjusted pretax profit of £282 million, an increase of 18% from the prior year, and group revenue rose 10% to £1.87 billion. Despite the better underlying results, the firm has put on hold a previously announced £175 million share buyback programme while it seeks clarity on the total financial consequences of the California event.
Chief Executive Peter Dilnot said partial production has been restarted. The company added that it will continue to coordinate with customers, regulators and other authorities with the aim of returning the site to full production during the second half.
Melrose reiterated its full-year outlook. The company also noted the exchange rate applied in reporting: $1 = 0.7436 pounds.
Financial and operational context
The announced incremental cost - £25-30 million in H2 2026 - represents a discrete charge tied directly to remediation and recovery activity at the Garden Grove facility. Melrose has quantified the shorter-term impact on first-half results already, reporting a £16 million revenue reduction and a £9 million hit to adjusted operating profit attributable to the incident.
While the six-month results show revenue and underlying profit growth year-on-year, the decision to pause the £175 million buyback reflects management caution as the company assesses recovery timelines and total cost exposure. Partial production resumption reduces immediate operational downtime, but the company has not stated that full capacity is restored.
Melrose said it will work closely with affected customers, regulators and other authorities to restore full production in the second half.