Melrose issues latest trading update for GKN

November 17, 2018

Melrose Industries PLC has issued a trading update for the four months from July 1–October 31, 2018. The group acquired GKN plc in April 2018 after receiving the support of GKN’s shareholders. According to the update, Melrose has seen strong revenue growth in the Aerospace and Powder Metallurgy segments, with the group currently trading in line with the board’s expectations for 2018.

The Powder Metallurgy division achieved revenue growth in the period of 9% compared to the same period in 2017, with improved margins. The group stated that this positive result offers confidence that the 14% margin target for the division will be achieved in the medium term.

The Aerospace division achieved revenues up 6% compared to the same period in 2017, and good progress is said to have been made on margin, including improvements to the division’s performance in North America. Melrose stated that, with an experienced and incentivised management team, the division is said to be making the necessary improvements to achieve acquisition objectives.

Revenue in the Automotive division was flat for the period compared to 2017. The margin was reported to be lower, but Melrose stated it expects planned operational improvements identified at the time of its acquisition to positively impact performance in 2019. In November 2018, Liam Butterworth was appointed as the new CEO of the Automotive division, and a new management team is currently being assembled from various internal and external sources with the aim of further enhancing the performance of the business.

Overall, Melrose stated that it is confident the GKN businesses it acquired in April 2018 will offer good opportunities for value creation over the medium term. The group will present its full year results in March 2019, and will host a Capital Markets Day in London, UK, on April 3, 2019, focused on its Aerospace and Automotive divisions.

Christopher Miller, Melrose Chairman, stated, “Melrose has a proven business model, which has been successful over many years and through several economic cycles. We are confident that there is an outstanding opportunity to make significant and lasting improvements to the performance of the GKN businesses. Whilst certain end markets may be unpredictable, the group is on track to meet our expectations for this year. We are excited by the future prospects of the group and look forward to delivering significant value for shareholders.”

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