AGM Trading Statement
Melrose Industries PLC (“Melrose” or the “Group”) publishes the following trading update for the four months from 1 January to 30 April 2021 (the “Period”) ahead of its Annual General Meeting taking place later today. All numbers are calculated at constant currency.
Group and cash generation
Melrose is trading modestly ahead of expectations.
For the Melrose Group, the momentum seen in the second half of 2020 has continued into 2021, with sales in the Period being 8% higher than in the same period in 2020. Excluding Nortek Air Management, Group sales grew by 4%.
The operating margins achieved in the first quarter of the year continued to improve faster than expected and cash generation for the Group is encouraging, with Melrose being cash neutral in the first quarter, in what is traditionally a cash outflow period.
The Melrose Board is encouraged by the start to the year and expects the improvements will continue, albeit the growth rate will be impacted to a degree by the well publicised supply issues on semi-conductors in the global automotive supply chain.
In the Period, as expected, Aerospace continued the sales trends seen last year with defence growing and civil significantly down. In the Period, sales were down 27% compared to the same period in 2020 and 33% on 2019. Encouragingly, Aerospace made a modest profit in the first quarter of 2021 at a demand level that was loss making last year. This provides strong evidence that the numerous cost saving, and improvement projects are starting to have a positive impact. On 31 March 2021 Fokker Services BV and Fokker Techniek BV were sold for a nominal sum, in 2020 these businesses had sales of c.£140 million and were approximately breakeven.
Automotive sales in the Period were 28% up compared to the same period in 2020, and 13% below 2019. This is consistent with the market demand recovering, but with a deferred impact on growth rates due to the impact of the semi-conductor shortage in the global automotive industry.
The Automotive margin in the first quarter was encouragingly above that achieved in the second half of last year, which is consistent with the improvement plans continuing to deliver benefits.
Powder Metallurgy has seen a strong recent trading performance with sales in the Period being up 35% compared to the same period in 2020 and also up 1% on 2019 with margins in the first quarter significantly higher than those achieved in the second half of last year and also higher than the same period in 2019. Powder Metallurgy is gaining market share and improving its operations, both of which are trends expected to continue.
Nortek Air Management
Nortek Air Management continued to perform well in the first quarter of the year with sales up 28% on last year and 27% up on 2019, continuing the momentum seen in the second half of last year.
The Melrose Board is delighted to have exchanged contracts on the sale of Nortek Air Management with Madison Industries for $3.625 billion, as announced on 19 April. The completion of the sale process is proceeding as expected, following which the details will be announced for the proposed portion of the proceeds to be returned to shareholders.
The Other Industrial division also continued to trade well in the Period with sales 12% up on 2020 and 12% down on 2019. The margin achieved in the first quarter was up on the same period in 2020.
Melrose will be holding an Investor Day about the Automotive and Powder Metallurgy divisions on 20 May, starting at 2.15pm, to explain in more detail the improvement, growth, and exciting new technology opportunities in these businesses.
Simon Peckham, CEO of Melrose Industries PLC, said:
“We are pleased with our start to the year and hopefully will see this momentum continue for the rest of the year. We are encouraged by the significant improvements made to the GKN businesses being reflected in their financial performance. We are confident that GKN will be as successful as previous acquisitions, a track record illustrated recently by the announced sale of Nortek Air Management.”
|Melrose Investor Relations:||