Melrose Industries PLC, UK, has reported that despite earlier plans for a quick sale of the GKN Powder Metallurgy division, the company has no immediate plans to sell the business. In the company’s recently published 2018 Annual Report, Melrose stated that, “whilst we will continue to review the position in the months to come, we expect GKN Powder Metallurgy to remain in the group for the present.”
Upon taking control of GKN, Melrose stated that it set about removing the duplicate central functions and decentralising the GKN businesses, simultaneously reorganising the Melrose Group into five divisions: GKN Aerospace; GKN Automotive; GKN Powder Metallurgy; Nortek Air & Security; and Other Industrial.
“For the GKN businesses, decentralisation was the first step in bringing about the change in culture we believe is vital to securing long-term improvement,” stated Simon Peckham, Melrose’s Chief Executive. “For GKN Aerospace and GKN Powder Metallurgy, we worked with incumbent management teams to agree their management plans.”
“Having agreed their approach, the GKN businesses have been given the freedom and responsibility to start to deliver on their commitments. Part of this has been a refocus on profitable sales rather than solely on growth. There is also a clear expectation that they be good stewards of their businesses for the benefit of all stakeholders.”
In the Annual Report for the year ended December 31, 2018, the company announced statutory revenue for the Melrose group of £8,605 million (2017: £2,092 million) and, despite declaring a statutory operating loss of £392 million (2017: £7 million), primarily as a result of the required accounting for the GKN acquisition, its adjusted operating profit was £847 million (2017: £279 million).
“This has been a transformational year for Melrose and we are delighted to announce, on an annualised adjusted basis, an operating profit of over one billion pounds. 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,” stated Justin Dowley, Melrose’s Non-executive Chairman.
“Despite the current economically uncertain environment, we have every confidence that we will be able to continue to unlock the substantial shareholder value from the former GKN businesses and further improve Nortek,” he concluded.