Melrose warns of aero­space job cuts af­ter losses climb

The Daily Telegraph - Business - - Business - By Si­mon Foy

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

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