Melrose reports trading at top of expectations
Melrose Industries
625.20p
17:14 25/04/24
Melrose Industries said it was trading at the top of board expectations helped by a recovery in automotive markets but the company was cautious about the outlook.
FTSE 100
8,078.86
17:14 25/04/24
FTSE 350
4,434.34
17:09 25/04/24
FTSE All-Share
4,387.94
16:49 25/04/24
General Industrials
6,780.26
17:09 25/04/24
Aerospace sales fell 37% in the four months to the end of October from a year earlier but cost cuts will ensure the business broadly breaks even for the year, Melrose said in a trading update.
The FTSE 100 company's automotive and metallurgy business picked up. Automotive revenue fell 3% and powder metallurgy income was down 7%. Melrose said an improving trend in the four month-period was flattered by a General Motors strike a year earlier.
Nortek Air Management revenue rose 13% supported by new technology, supply chain management and a recovery in residential construction. Other businesses are trading in line with forecasts.
Cash generation was at the higher end of expectations and net debt excluding currency movements will fall in the current year despite restructuring costs, Melrose said.
"Your board is encouraged by this, but clearly given the global uncertainty caution is required on any predictions for next year," the said.
The industrial turnaround company bought GKN, the aerospace engineer, in a hostile takeover in 2018, two years before Covid-19 sent the aviation industry into its biggest crisis. Melrose was forced to scrap its dividend to conserve cash in July before reporting a £560m first-half loss. It is making big job cuts at GKN.
"Trading in the Period has been encouraging in a number of our end markets and we are seeing the benefits of actions taken by management in our businesses' performance. While short-term uncertainty remains, we are confident that our businesses can substantially improve their margins from today over the medium-term even without the need for full end market recovery."