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CORRECT: Melrose says Aerospace trades well; set for Auto spin-off

19th Jan 2023 10:59

(Correcting that GKN is a UK company.)

(Alliance News) - Melrose Industries PLC on Thursday provided an operating update on a business it plans to keep and one it plans to spin off onto the London Stock Exchange.

Ahead of a capital markets event in London on Thursday, Birmingham-based Melrose said the Aerospace business of the former GKN traded in line with expectations in 2022 and is seeing "strong momentum" into 2023. It provided no figures for the Aerospace division.

For the so-called DemergerCo, however, Melrose provided estimated 2022 results. DemergerCo consists of the Automotive, Powder Metallurgy and Hydrogen businesses of GKN. Melrose bought the UK engineering firm in 2018 in a hostile takeover. Back in September of last year, Melrose said it plans to retain the Aerospace part of the GKN business and spin-off the rest as a separate London listing.

On Thursday, Melrose said the combined DemergerCo businesses recorded GBP5.20 billion in revenue in 2022, up 6% at constant currency rates. Operating profit was between GBP320 million and GBP330 million, up 21%. The operating margin was 6.3%, which Melrose said was up from 5.5% in 2021.

Earnings before interest, tax, depreciation and amortisation for the Automotive, Powder Metallurgy and Hydrogen businesses was GBP605 million to GBP615 million last year, up 5%, with an Ebitda margin of 11.7%, which was flat on 2021.

Melrose specialises in buying and improving industrial companies. It said it will seek shareholder approval for the demerger at the end of March and aim to complete it soon thereafter.

"We are proud of what has been achieved at DemergerCo during our ownership and are sure that with its excellent management team it will have a successful future as an independent group," said Melrose Chief Executive Simon Peckham.

Melrose will release its full 2022 group results on March 2.

The stock was down 1.7% at 147.15 pence Thursday morning in London.

By Tom Waite, Alliance News editor

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