AGM and Interim Management Statement

RNS Number : 9290C

Melrose PLC

09 May 2012

 



9 May 2012

MELROSE PLC

AGM AND INTERIM MANAGEMENT STATEMENT

Ahead of the Annual General Meeting being held later today, Melrose PLC issues the following Interim Management Statement for the period from 1 January 2012 to date.

OVERVIEW

The positive momentum experienced in our businesses on revenue and order intake during 2011 has continued into 2012.  Revenue for the Group in the first four months of 2012, at constant currency, is up 9% compared to the same period last year, and the total value of orders received in the period is 3% higher than revenue.  Whilst the first quarter is historically the slowest quarter of the year, the start to 2012 has been pleasing.

The investment phase, referred to in our Annual Results Statement in March this year, continues in our businesses with capital expenditure significantly ahead of depreciation.

Current trading remains in line with plan.

ENERGY

Brush Turbogenerators, which accounts for three quarters of this division by revenue, continues to grow as planned and to perform satisfactorily. Revenue for the first four months was up 10% on the same period last year, virtually all of the new build revenue planned for 2012 is now in the order book and early indications from customers are suggesting strong demand into 2013. However, due to the particular reasons noted below, margins, as expected, are slightly lower than in the same period last year.

The aftermarket has had a slower start to the year, but the increasing order book points to a satisfactory performance for the year. 

As reported in the Annual Results Statement, Turbogenerators' operating profit in 2011 benefited from a contract to supply some larger generators to a customer in the Slovak Republic, thereby distorting year-on-year comparisons.

The restructuring project to improve manufacturing efficiencies in the Netherlands facility is continuing to plan and this will improve the performance of the factory.  The integration of Hawker Siddeley Switchgear into Turbogenerators is proceeding well and will benefit the results this year.

Marelli has had a good start to the year with revenue up 14% on last year and order intake at record levels.

LIFTING

Lifting has had a strong start to the year with revenue up 11% on the same period last year and the total value of orders received in the period being 8% higher than revenue.  The benefits of ongoing investment and operational improvement are being reflected in an encouraging performance in margins in this division.

Crosby grew significantly in 2011 and this has continued into 2012 with revenue in the period up 23% on last year, and order intake up 17%.  The strength of the US onshore Oil & Gas end market continues to benefit Crosby.

During the period, we appointed a new CEO for the Crosby Group to continue the excellent work of the previous CEO who had been with the company for over 40 years.  The new CEO will continue to focus on the international expansion of Crosby.

Bridon has an exciting year ahead. In November the new £20 million factory in Newcastle, UK is due to open.  This will supply high specification rope for demanding applications for the deep water offshore Oil & Gas market and will be a key part of the strategy to position Bridon as the global technology leader in its field.  This project remains both on time and within budget.

In addition, it is pleasing to see that Bridon continues to see recovery in its key end markets, and most encouragingly, further signs of recovery in offshore Oil & Gas.  Whilst revenue for Bridon in this period is up only 1% on last year, the order intake has increased 16%.

The combination of Bridon and Crosby means the Lifting division has had a strong start to the year.

OTHER INDUSTRIAL

In the first four months of 2012 revenue was 1% above the same period last year.

Truth is seeing some pockets of recovery in its end market of US housing, but it is too early to conclude anything meaningful from this.

MPC, on the back of a very strong 2011, continues to perform well and is benefiting from the investments made in its operations. Harris has had a slower start to the year with revenue down 5%.

CASHFLOW AND NET DEBT

As reported in the Annual Results Statement, restructuring provisions of £15.9 million were charged last year, which are being paid in cash in 2012.

Working capital remains efficient and capital expenditure continues to be significant. At the end of April cash spent on capital projects was almost 2x depreciation which clearly highlights the continuation of the investment phase in the current businesses.

Cash generation remains in line with plan.  Net debt is planned to increase by the end of 2012 to approximately 1.5x headline operating profit before depreciation and amortisation, with the main outflows coming in the first half of the year.

MANAGEMENT CHANGES

With effect from the Annual General Meeting today and as reported in the Annual Results Statement made in March, David Roper becomes Executive Vice Chairman and Simon Peckham becomes Chief Executive of Melrose PLC.

OUTLOOK

Further progress is being made during 2012 to improve the quality and performance of our businesses and this should be particularly evident in the second half of the year.

The investment phase continues, with 2012 being the second year of significant expenditure on capital projects.  The projects should further improve performance once they are complete and this, together with the underlying strength of the Group's end markets, makes us confident of the outturn for the year.

At the time of our Annual Results Statement in March of this year, we stated that we were more confident that a suitable acquisition opportunity would arise.  This confidence remains, and we are ready to proceed when the opportunity arises, but will remain patient and disciplined in our approach to finding the right acquisition.

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Enquiries:

Nick Miles/Ann-marie Wilkinson/Andrew Benbow    M:Communications

020 7920 2330

 

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