5th Mar 2014 08:44
LONDON (Alliance News) - Engineering investment group Melrose Industries PLC Wednesday reported a large increase in profit and revenue for the full year, largely driven by the acquisition of Elster Group in August 2012.
Melrose said its 2013 results are not directly comparable to 2012 as the prior year performance includes only four months of Elster trading, after its acquisition in a deal worth USD2.3 billion.
Melrose, which specialises in buying underperforming engineering companies and turning them around, posted pretax profit of GBP171.1 million for 2013, up from GBP6.3 million, as revenue rose to GBP1.73 billion, from GBP1.05 billion a year earlier.
The company's Elster business, which provides metering and utilisation solutions to the utilities sector saw revenue rise to GBP1.12 billion, from GBP411.1 million in the fourth months post acquisition 2012.
The gas side of the Elster business posted revenue of GBP688.9 million compared with GBP236.9 million in the four months post acquisition. Melrose said the division was boosted by global demand for conventional gas meters, which compensated for further delays in the roll out of smart meters in Europe.
In addition, operating profit for Elster Gas increased significantly when compared to 2012, as the actions identified by the new management team at acquisition started to take effect. The division posted operating profit of GBP152.4 million, compared with GBP46.7 million in the fourth months post acquisition in 2012.
Elster Water and Elster Electricity also saw growth in revenue and operating profit. Overall the Elster business saw operating margin rise to 17.4% from 12.4%.
However, Melrose said Brush Turbogenerators, its electricity generating equipment business, didn't fare as well, with revenue and operating profit falling. The business underwent a restructuring programme in 2013, and Melrose said the business is well positioned for further growth.
Bridon, which designs and manufactures a comprehensive range of lifting and stabilising solutions for applications in wire rope, fibre rope, steel wire and strand, also struggled with revenue and operating profit down.
One of the reasons Melrose cited was weakness in the mining market, which affected the second half of the year.
During the period, Melrose sold five businesses acquired with FKI for gross proceeds of GBP950 million, which was more than triple their value at 2008. The FKI business now consists of Bridon and Brush.
Melrose said diluted earnings per share rose 36% to 12.8 pence from 9.4 pence. Net debt rose to GBP140.8 million from GBP997.7 million.
"Last year was a tremendous year for Melrose with great successes in the 'improve' and 'sell' parts of our strategy," Chairman Christopher Miller said in a statement. "Almost GBP1 billion was raised from disposals which trebled shareholders' money, and Elster increased its profits by over a third in our first full year of ownership."
Miller said the firm is keen to buy again but "we remain patient for the right opportunity to arise."
The company proposed an unchanged final dividend of 5.0 pence per share, with a full year dividend up 2% to 7.75 pence from 7.6 pence in 2012.
Melrose shares were down 5.1% at 311.11 pence early Wednesday.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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