Melrose is trading in line with expectations.
The first two months of ownership of Nortek have been encouraging with many actions being taken in a short space of time.
Your Board is confident that Nortek is well positioned to achieve the acquisition assumptions following management changes and operational improvements. The inherited strategies of each of the businesses have been reviewed with the level of investment increasing and, where necessary, the focus of management changing.
Some of the actions that have already been carried out are as follows:
- The Nortek head office has been closed and the expected savings will be achieved over the next few months
- A new CEO has been appointed to run the combined Heating, Ventilation & Air Conditioning (HVAC) businesses
- Operational improvements are underway in HVAC and its loss-making businesses are being closed
- The Audio, Visual & Control business, which was making significant losses on acquisition, has already been rapidly improved
- A process is underway to eliminate unprofitable products across the Group
- Centralised functions for warehousing, human resources and IT are being returned to the individual businesses to create accountability
The Melrose Board is pleased with the progress made to date and is confident of creating significant shareholder value from this acquisition.
As previously announced, the second half performance of Brush is expected to be stronger than the first half, consistent with the seasonality of the business.
The end markets for Brush remain tough for both market and customer reasons with a prolonged challenging sales environment. To react to this the Brush workforce has been reduced by around a quarter since the start of 2015, realigning the cost base accordingly.
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Nick Miles, Charlotte McMullen: +44 (0) 20 3514 0897