Melrose operating profit down to £340m
Melrose Industries (LON:MRO), owner of GKN, confirmed on Thursday morning it had initiated the process of selling its Nortek air-conditioning division.
However, there can be “no certainty a disposal will be completed”, according to the company’s financial statement released today.
The manufacturing company also posted a sharp drop in its operating profits, from £1.1bn in 2019 to £340m.
Adjusted free cash generation was £628 million, 6% higher than 2019, prior to £172 million of restructuring costs.
Melrose’s strong cash generation resulted in the company’s net debt falling by over £400 million to £2.85 billion by the end of 2020. This is down from £3.3bn from the year before.
The FTSE 100 company has proposed a final dividend of 0.75p “given the excellent cash generation achieved in the year”, according to the financial statement. This follows Melrose’s decision to withdraw its dividend for 2019 on account of the global pandemic.
The Melrose share price was up by 1.1% on early Thursday morning trading to 178.9p per share following the company’s announcement. Year-to-date the value Melrose shares are up by 97p per share.
Justin Dowley, chairman of Melrose Industries, commented on the results:
“Whilst the COVID-19 crisis has had a major detrimental effect this year, Melrose has generated record cash flows and continued to invest to improve our businesses. All of this positions the Group well for a good recovery and strong performance in the future. Amidst these difficult conditions, Melrose has also managed to significantly reduce the £1 billion GKN UK pension scheme funding deficit that we inherited at the time of acquisition.”