Melrose Industries PLC has announced its interim financial results for the six months ended June 30, 2019. The company reported half year revenues of approx £6 billion, a significant rise from £2.97 billion in the first six months 2018. Operating profit was reported at £539 million, up from £284 million in the first six months 2018.
Melrose acquired GKN plc, including GKN Powder Metallurgy, the world’s largest producer of Powder Metallurgy components, for £8.1 billion in April 2018. In its 2019 half year results, the company stated that the three main divisions of GKN are on track to achieve previously announced targets.
Of particular note was that Automotive and Powder Metallurgy divisions were maintaining profit well in an automotive industry downturn, due it was said to Melrose’s decisive cost reductions. It was also stated that many operational improvement programmes and capital investment projects were underway to help improve performance further, while good progress is being made on resolving the GKN loss-making contracts.
Further, a new target to improve GKN’s working capital efficiency is expected to release additional future free cash of £400 million within Melrose’s ownership period. The company added that it has made record investments in aerospace technology so far in 2019, and announced plans to create the ‘One GKN Aerospace’ organisation with the aim of further improving performance in this sector.
Justin Dowley, Melrose Chairman, commented on the results, “These results show the initial fruits of the ‘improve’ stage of Melrose’s ownership of GKN and, with the overall GKN margin increasing positively, we are excited about what is possible. The performance is in line with expectations and leverage is better than expected.”
“At the same time, this has been a year of record investment in aerospace technology and substantial eDrive development,” he continued. “The Melrose Board is confident that our businesses will deliver significant upside for shareholders.”