Demerger of GKN Powder Metallurgy, GKN Automotive and GKN Hydrogen businesses set for April
March 8, 2023
Melrose Industries PLC, UK, has announced its proposed demerger of the GKN Powder Metallurgy, GKN Automotive and GKN Hydrogen businesses from the Melrose Group is on track, with completion expected on April 20, 2023 (subject to shareholder approval). Its plan to form a new independent holding company, Dowlais Group plc, has been approved by the Financial Conduct Authority (FCA), and a General Meeting to approve the demerger proposal will be held March 30, 2023.
Melrose first announced its plans to separate the Powder Metallurgy and Automotive businesses in September 2022. At that time Justin Dowley, chairman of Melrose Industries PLC, stated “Since acquiring GKN in 2018, we have reinvigorated each business to achieve its potential. The proposed demerger now gives each an exciting opportunity to individually grow shareholder value through organic growth and acquisition in both platforms.”
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In its full-year 2022 results, Melrose reported that Dowlais (comprising GKN Automotive, Powder Metallurgy and Hydrogen businesses) posted a 7% increase in revenue for the year, driven by price increases and growth, particularly in target electrification markets. In line with the latest automotive industry forecasts, the outlook for 2023 was approximately 3% volume growth.
Adjusted operating profit of £332 million was up 24% for Dowlais, said to be driven by strong operational performance, restructuring gains and successfully offsetting inflation. The statutory operating profit was £33 million, compared to a loss of £98 million in 2021.
“We are delighted with these results, and everything is on track for the demerger. We consider a restructured Aerospace business to be one of the best businesses Melrose has ever owned. We are confident that a combination of restructured and refocused high-class Engines and Structures businesses, and overall aerospace market recovery, positions these businesses for a significantly better than expected performance in 2023 and beyond,” added Dowley.
The Melrose Aerospace division (GKN Aerospace) was said to be experiencing continued strong momentum and market recovery with an 11% sales increase in 2022 and a very positive outlook, resulting in confidence that its performance will significantly exceed expectations in 2023 and beyond. Adjusted operating profit of £186 million was up 51% and extensive restructuring was reported to be underway to deliver further gains.