Melrose back in black ahead of GKN spin-off
MELROSE Industries swung back into the black as it gears up to split off and float GKN’S automotive business.
The FTSE 100 turnaround specialist made a £384m profit last year, compared with a £307m loss in 2021. Sales hit £8.2bn, up from £7.5bn.
The results were driven by a ‘good performance’ at the automotive arm of GKN which it plans to float in april under a new name – Dowlais.
The division’s sales rose 7pc in 2022 to £5.2bn, while profits rose almost a quarter to £332m. analysts at Peel Hunt said the spin-off ‘looks rock solid’.
Melrose also highlighted a strong performance at the rest of GKN it owns, with the aerospace division’s sales up by more than a tenth and profits by 51pc. Shares rose 1.2pc, or 1.85p, to 155.85p.
The firm, which buys struggling industrial companies, improves them and sells them on, snapped up GKN for £8.1bn in 2018. It has restructured it, including the closure of GKN’S automotive engineering site in Birmingham, with the loss of 500 jobs.
The name Dowlais is a nod to the village in south Wales which was home to the industrial revolution- era iron and steelworks of the Guest family, one of the founders of the original Guest, Keen and nettlefolds, later renamed GKN.
Dowlais will be led by liam Butterworth, appointed by Melrose to run GKN automotive in 2018. Preparations for its float have ‘progressed well’. ‘ We have not only turned around the performance of one of the UK’s longest standing industrial businesses, we’re seeking admission on to the london Stock exchange for Dowlais which should make it the UK’s premier listed automotive business,’ bosses said.
They said Melrose ‘more than delivered’ on promises it gave when buying GKn. Melrose will also hold a 3pc stake.