Melrose starts sale of Nortek division

LONDON: Melrose Industries has begun a sale process for its Nortek air-conditioning division, the British engineering business owner said on Thursday, as it posted a steep fall in annual profit on the fallout from the COVID-19 pandemic.

Sales in airlines and motor vehicles industries were pummelled as the coronavirus crisis disrupted non-essential travel globally and forced people to stay indoors. Immunisation campaigns, if successful, could provide some respite this year.

The company, which also owns jet and car parts supplier GKN, said Nortek is trading “very strongly” and that there was no guarantee a sale would take place. Melrose has had to restructure its coronavirus-hit GKN unit and cut jobs to shoreup cash amid the health crisis.

Melrosespecialisesinacquiringunder-performing businesses, turning them around and eventually selling them. The company saw double-digit revenue decline across its divisions, except Nortek, with the biggest drop seen in its aerospace unit where sales slumped 27%. “Melrose has generated record cash flows and has also managed to significantly reduce the £1 billion GKN UK pension scheme funding deficit that we inherited at the time of acquisition,” Chairman Justin Dowley said.

The London-listed group’s GKN aerospace and automotive units accounted for nearly three quarters of its revenue in 2020 while the company said it continues to expect no recovery in its civil aerospace market this year.

The year “2020 may have proven the most challenging in Melrose’s history but, coming out, we see management’s reputation enhanced,” analysts at J.p.morgan said in a note.