Melrose warns of aerospace job cuts after losses climb
MELROSE warned of significant job losses at its GKN Aerospace division as the turnaround investor swung deeper into the red in the first half.
The FTSE 100 firm – which bought defence business GKN two years ago – said sales in aerospace fell 18pc during the period. As a result, the company has started a consultation process with some of its 53,000 employees and said that “regrettably a significant reduction in the worldwide workforce is inevitable” in the second half of the year.
Simon Peckham, chief executive, who shared a £170m bonus pot with three other directors in 2018, refused to be drawn on how many positions would go but said there would be “relatively few” cuts to its UK workforce and most would be voluntary redundancies. The restructuring is expected to save £100m in 2021.
In July, the company warned of impending job losses after suffering a severe blow during lockdown.
Melrose plunged to a £685m statutory pre-tax loss for the six months to June 30, down from a £109m loss for the same period last year. Revenue also declined by more than a quarter to £4.1bn. However, the firm was upbeat about its outlook, adding recent trading was at the higher end of expectations. Mr Peckham said the firm’s automotive businesses had seen “good summers” and trading was recovering but not yet back to normal levels.
Alongside its automotive division, the ventilation and air-conditioning business Nortek drove the recent robust performance. However, the company said it would “review the strategic future” of Nortek in the early part of next year. Plans to sell Nortek were announced in March but were quickly put on hold as the pandemic hit.
Melrose bills itself as a listed private equity fund that buys ailing industrial businesses, improves them and sells them on, but has been dubbed a corporate vulture by critics.
Mr Peckham said the firm would be looking for further acquisition opportunities in 2021 and beyond, particularly in the aerospace and automotive industries.
Melrose said it would be “inappropriate” to pay an interim dividend for 2020. Shares in the company climbed 13pc to close at 113.2p.
Airports and the global aerospace industry have been hit hard by lockdown measures