19th Nov 2013 09:41
LONDON (Alliance News) - Engineering investment group Melrose Industries PLC Tuesday said trading since July has been in line with expectations, as its Elster metering business continues to perform strongly.
Melrose, which specialises in buying underperforming engineering companies and turning them round, said Elster sales and orders in the water business were up 4% and 2%, respectively, compared with the same period in 2012, while in electricity order intake had increase 14%.
The division provides metering and utilisation solutions to the utilities sector.
Melrose said it expected the gas side of the business to do very well going forward with the roll out of smart meters and growth in gas usage. Sales for the business were up 8% in the period.
Despite a difficult sales environment for the energy arm, it traded in line with expectations, Melrose said. Order intake increased, but the company warned "care must be taken in extrapolating too much from what is a relatively short period in the energy cycle."
The division makes electricity-generating equipment for the power generation, industrial, oil and gas sectors.
The lifting business, which designs lifting and stabilising solutions such as wire rope for the construction sector, will be seeing significant changes. The company plans to sell its Crosby and Accon businesses, leaving Bridon as its only business within the division.
Assuming the disposal of Crosby and Acco completes as expected, Melrose said it intends to return capital, in the region of GBP600 million, to shareholders in the early part of next year.
Bridon accounted for half of the lifting division's sales at the half year and Melrose expects it to maintain this level of sales in the second half at a margin similar to the 13% it made last year.
However, Bridon is expected to be hurt by a slowdown in mining orders which make up around 20% of its sales.
Looking ahead, Melrose said it was encouraged by its Elster business but overall revenue growth the groups "still remains hard to find." Nonetheless, Melrose said there were some early signs that there could be a better sales environment in 2014.
The stock was trading at 301.90 pence Tuesday morning, down 2.60 pence or 0.9%.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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