Melrose beat internal expectations and swing to a profit in 2019

Melrose Industries PLC (LON:MRO) have beaten internal and market expectations across the recently ended financial year.

The firm said: “The results for 2019 were comfortably ahead of the Board’s expectations for both profit and cash generation

2019 was a year of significant progress but encouragingly much remains to be done and our divisional teams are delivering.

As such, we expect 2020 to be another year of good progress driven by each of the key businesses with a dual focus on efficiency programmes, to deliver operational improvements, as well as record investment in R&D to maintain technological market leadership.”

The FTSE 100 listed firm told the market that pretax profit had amounted to £106 million across 2019, which sees a massive improvement on the loss of £452 million posted last year. On an adjusted metric, pretax profit surged 32% to £889 million.

Looking at revenue figures, Melrose delivered revenues of £10.97 billion – again seeing a massive 35% spike from a year ago.

Melrose noted that its operations within its GKN unit are gaining momentum following the first full year of ownership.

GKN gives Melrose access to the aerospace, automotive, and powder metallurgy industries – and the purchase was made in 2018 for a reported £8.4 billion.

Notably, aerospace revenue also increased 7% however automotive revenue was down 6% within market expectations.

Melrose going forward have told the market that 2020 should be another year of progress in each division.

The impact of the coronavirus is difficult to assess, and the firm have focused on what they can control.

Justin Dowley, Chairman of Melrose Industries PLC, said:

“We are delighted with the Melrose performance in 2019 and the substantial value that is being unlocked. Notwithstanding any implications of the COVID-19 outbreak, the bedrock has now been built for the GKN businesses to attain results which were not previously achievable, and, in addition, the shareholder value built up in our longer held assets is closer to being realised. This shows, once more, that the Melrose model thrives by investing properly in businesses and giving management the entrepreneurial freedom to succeed. This is just the start of what is possible for GKN.”

Shares in Melrose Industries PLC trade at 208p (+1.85%). 5/3/20 10:57BST.

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