AGM and Interim Management Statement

RNS Number : 1737E

Melrose Industries PLC

08 May 2013

 



8 May 2013

MELROSE INDUSTRIES PLC

AGM AND INTERIM MANAGEMENT STATEMENT

Ahead of the Annual General Meeting being held later today, Melrose Industries PLC issues the following Interim Management Statement for the period from 1 January 2013 to today ("the Period"). 

OVERVIEW

Trading for the Group in the Period is in line with expectations.

Revenue in the Period for the Group¹ was 1% lower than last year, at constant currency, and operating margin was higher.

Further improvements to the performance of Elster² have been achieved and as a consequence, the results achieved by Elster² in the Period are significantly ahead of its performance in the same pre-acquisition period last year.

The conditional sale of Truth, our US hardware business, was announced last week and a sale process is underway for Marelli Motori, our Italian generator business. There has been encouraging progress in the Marelli sale process but it is still at an early stage.

Overall the performance of the Group during the Period has been encouraging and your Board remains confident about the outcome for the year.

 

ELSTER²

Trading in the Period within Elster has been strong and there are clear signs that continuing improvements are being delivered.

Elster's revenue was slightly ahead in the Period and the headline profit and operating margin are both up on last year.  Investment and restructuring plans are underway.

The order momentum in Elster has been good with order intake in the Period in line with revenue.

Further savings in central costs have been achieved in the Period and as a result the on-going run rate for Elster central costs has now reduced from 2% of Elster revenue at acquisition to a level which is immaterial.

It is also particularly pleasing to note that improvements are coming through in each of the three businesses within Elster, namely Gas, Electricity and Water.

The Board remains delighted with the prospects for Elster and is confident it is proving to be another successful acquisition.

ENERGY

The results for the Energy division are as expected.  The profit performance for the division for the Period was flat compared with 2012 with sales being 1% down.

For Brush Turbogenerators the order intake was 1% below last year.  However, it is expected that there will be more deferrals of some OEM orders in the remainder of the year and as a result it is likely that Brush's operating profit will not reach last year if current trends in order profiles continue.  Brush Turbogenerators remains an excellent business which is well positioned, and this gives the Board confidence that the medium term performance will be strong.

Marelli is trading very well and as stated previously is in the early stages of an encouraging sale process.

 

LIFTING

Trading in the Lifting division is in line with expectations. After a slow start to the year sales in the Period recovered to be only slightly down compared to the same period last year. It is pleasing to see the weekly order intake rate recovered in the Period, being 9% higher than the fourth quarter of 2012, which positions this division well for the balance of the year.

Large investments have been made within the Lifting division over recent years, particularly in Bridon, and current trading plus the benefits of these investments should ensure that the division continues to perform well.

 

OTHER INDUSTRIAL

The larger of the two businesses within the Other Industrial division is Truth. The conditional sale of this business to Tyman PLC has been announced and is expected to complete before the half year for a total consideration of $200 million, equivalent to1.6x 2012 turnover and 8.9x 2012 EBITDA.

Harris, the smaller of the two businesses in the Other Industrial division, continues to experience a tough market environment for scrap steel processing, but nonetheless remains profitable.

 

CASHFLOW AND NET DEBT

Underlying cash generation from the businesses remains strong.  As signalled at the March results announcement, significant restructuring costs, mainly within Elster, are being incurred in the first half of this year.  When combined with the cost of the significant investment, mainly in the Lifting Division, the result is that net debt and leverage for the Group will rise a little at the half year from the levels seen at the year-end but are expected to reduce again to similar levels to last year by the end of 2013.  This excludes the impact of disposal proceeds from Truth or, if relevant, Marelli.

OUTLOOK

The Board remains encouraged by the performance of the Group in the Period which, as stated, is in line with expectations.

Whilst worldwide economic conditions mean your Board does not consider that 2013 is likely to be a year of significant revenue growth, our market positions and the opportunities to improve the performance of our businesses within the Group means your Board remains confident of meeting expectations and improving performance this year.  As disposals from the FKI acquisition start to take place your Board remains committed to its strategy of returning value to shareholders as appropriate.

¹ Proforma group results including the results of the Elster division prior to its acquisition by Melrose

² Elster comparative numbers relate to a period prior to its acquisition by Melrose and were prepared under

   previous ownership and under US GAAP

 

 

-ends-

 

 

Enquiries:

M:Communications

Ann-Marie Wilkinson/Andrew Benbow                                   [phone]

 

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