* COO Peter Dilnot to replace Simon Peckham as CEO in March

* GKN Aerospace's Gregory to replace Martin as finance director

* Raises profit outlook, announces share buyback

Sept 7 (Reuters) - 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.

The owner of GKN Aerospace, which published its first set of results after completing the spin-off of Dowlais Group in April, announced a 500 million pound ($625.05 million) share buyback to start next month.

It also lifted its full-year profit expectations on the back of higher-than-anticipated margins at its engines division.

Shares jumped 7.8% to their highest since February 2020 in early trade.

The company, known as a turnaround specialist and whose strategy under Peckham since 2003 was to buy and sell manufacturing businesses, is now a pure-play aerospace group, it said.

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.

"Given Melrose has transitioned into a long-term aerospace group, the company believes that this is the right time to begin evolving the executive management team to progress the changed strategy," it said in a statement.

Finance Director Geoffrey Martin, who has been with the group for over 18 years, will also be replaced by Matthew Gregory, currently the finance chief of GKN Aerospace.

Melrose said adjusted pretax profit from continuing operations came in at 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, now expects full-year adjusted operating profit of between 375 million pounds and 385 million pounds, a increase of about 8% from its forecast in May.

($1 = 0.7999 pounds) (Reporting by Yadarisa Shabong in Bengaluru; Editing by Subhranshu Sahu and Jan Harvey)