28th Aug 2014 07:41
LONDON (Alliance News) - Engineering investment group Melrose Industries PLC Thursday reported an increase in profit for the first half, despite a mixed performance across the business.
Melrose, which specialises in buying underperforming engineering companies and turning them around, posted pretax profit of GBP69.6 million for the six months ended June 30, up from GBP64.1 million a year earlier, even though revenue fell to GBP780.9 million from GBP875.3 million.
Group operating margin moved up 2.9 percentage points to 18.9%.
On the back of its performance the company increased its interim dividend to 2.8 pence from 2.75 pence a year earlier.
The company has made gains over the past 18 months after it acquired Elster Group, which provides metering and utilisation solutions to the utilities sector, in a deal worth USD2.3 billion in 2012.
Elster continues to perform strongly, however, some of Melrose's other business - notably Brush Turbogenerators and Bridon - have struggled, it said.
Bridon, which designs and manufactures a comprehensive range of lifting and stabilising solutions for applications in wire rope, fibre rope, steel wire and strand, saw revenue fall to GBP122.8 million from GBP135.8 million a year earlier.
Melrose said performance in Bridon's end-user markets in the first half was "mixed". It said the mining market slowed significantly in 2013, while there was destocking in the supply chain, as mining customers came under pressure to cut costs.
Brush Turbogenerators, its electricity generating equipment business, also saw revenue fall to GBP164.5 million from GBP170.3 million amid "challenging" market conditions.
Melrose said each of Elster's divisions of gas, electricity and water performed well during the period, despite a dip in revenue.
Elster gas saw revenue decline 1% to GBP325.5 million from GBP348.1million, largely due to the timing of several major projects in the gas station segment of the business.
Revenue for Elster electricity fell 17% to GBP87.1 million from GBP117.9 million due to a slow start in the US. This expected trend follows the winding down of the last of the US federal government stimulus-funded Smart meter projects, which started in 2009. However, Melrose said a strong second half will more than compensate for this.
Meanwhile, the water side of Elster reported a 15% drop in revenue to GBP81.0 million from GBP103.3 million, due to the restructuring of the company's North America operations and the cessation of manufacturing mechanical meters in that marketplace.
Looking ahead, Melrose said economic recovery in Asia, the US and the UK looks strong compared with continental Europe and other parts of the world.
"The uneven nature of this recovery has made it unusual and harder to forecast. Against this background, our companies have performed well and we expect this to continue," Chairman Christopher Miller said in a statement.
"At the same time the uncertainties created by economic conditions may well present us with an opportunity to make our next acquisition and, with it, the chance to create more value for our shareholders," he added.
Melrose shares were quoted up 1.2% at 282.00 pence Thursday morning.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
Melrose