7th Mar 2019 08:28
LONDON (Alliance News) - Industrial turnaround specialist Melrose Industries PLC on Thursday said its 2018 results have beaten its own expectations.
Shares were 6.1% higher on Thursday in early trade at 191.05 pence each.
FTSE 100 member Melrose posted revenue of GBP8.61 billion in 2018, well above the GBP2.09 billion reported in 2017, though its pretax loss widened to GBP550 million from GBP28 million year-on-year.
This was mainly due to higher finance costs as well as restructuring, acquisition, and amortisation costs.
Excluding its GKN acquisition, Melrose's adjusted operating profit was GBP847 million, from GBP279 million in 2017.
Melrose has reduced its net debt to earnings before interest, tax, depreciation, and amortisation ration to 2.3 times, ahead of guidance of 2.5 times.
Melrose is paying a 3.05 pence final dividend, taking the 2018 total to 4.6p, compared to 4.2p returned in 2017.
"This has been a transformational year for Melrose and we are delighted to announce, on an annualised adjusted basis, an operating profit of over GBP1 billion. The former GKN businesses are proving their potential to offer the outstanding opportunities we expected and much has already been achieved in the short period of ownership," said Chair Justin Dowley.
"Despite the current economically uncertain environment, we have every confidence we will be able to continue to unlock the substantial shareholder value from the former GKN businesses and further improve Nortek."
GKN is going well, Melrose said, while Nortek is also improving. GKN was bought in spring 2018 after a contracted battle, for GBP8.4 billion.
GKN Aerospace made "substantial" progress in 2018 after a difficult 2017, Melrose said, while its outlook is good given a strong aerospace market.
GKN Automotive is to focus on growing demand in Asia, while the Driveline business within the unit will continue to review costs. The outlook for Automotive is positive in 2019, Melrose added.
In the GKN Powder Metallurgy arm, Melrose is continuing to focus on improving profitability, and Melrose is confident for a strong 2019 performance.
"There were wider macro challenges for some of our businesses in 2018 and we see these continuing into this year," said Dowley, commenting on Melrose's outlook.
"However, with culture change based on accountability, backed by significant investment and a more disciplined strategic focus being applied to improve all aspects of our businesses, we remain confident of further success as we enter 2019."
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