Melrose warns of ongoing Brush battle and Nortek currency headwinds

Engineering group Melrose Industries said its Nortek subsidiary faces currency headwinds in 2018 and that the market for Brush has been "very difficult".

Melrose, which specialises in buying underperforming manufacturing operations and improving the businesses, warned that exchange rate movements on products imported from China are likely to affect US-based Nortek.

Melrose said it remains confident of achieving its objectives for Nortek, which makes air management, security, home automation and ergonomic and productivity products.

The FSTE 250 group reported revenues in the period from 1 July to 29 October were up 3% in comparison with the corresponding period last year, while it also said cash generation remained strong.

Difficulties continued for its Brush business, which manufactures of electricity generating equipment for the power generation, industrial, oil & gas and offshore sectors.

Management are taking steps to address the problems but said the market remained "very difficult" and "has continued to worsen, consistent with the most recent negative trading statements elsewhere in the sector”.

“The current order intake by Brush would result in a low single-digit margin during 2018 but, as stated at the time of the interim results, a full review of Brush is underway.”

As of 08:49 GMT Melrose was trading 7.76% lower following the announcement.