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Aerospace division underpins profits at Melrose Industries

By Michele Maatouk

Date: Thursday 05 Sep 2019

Aerospace division underpins profits at Melrose Industries

(Sharecast News) - Turnaround specialist Melrose Industries posted a rise in interim pre-tax profit on Thursday thanks to a solid performance from its aerospace business, as it hiked its dividend and expressed confidence over its full-year trading.
In the six months to the end of June, adjusted pre-tax profit increased to £428m from £244m in the first half of last year, on revenue of £6bn, up from £3bn. On a statutory basis, pre-tax losses narrowed to £128m from £372m.

The company, which bought engineer GKN last year for £8.1bn, said trading was in line with its expectations for 2019, with the three main segments of GKN set to achieve their targets.

The group declared an interim dividend of 1.7p a share, up 10% on the year.

Melrose said the performance of its aerospace business was "significantly" better than the same period last year, with adjusted operating profit up 37%. The segment now makes up 34% of group adjusted profits, making it the largest division and profit driver for the company.

Meanwhile, the automotive and powder metallurgy divisions are "maintaining profit well" in an industry downturn thanks to cost reductions.

Chairman Justin Dowley said: "These results show the initial fruits of the 'improve' stage of Melrose's ownership of GKN and, with the overall GKN margin increasing positively, we are excited about what is possible.

"The performance is in line with expectations and leverage is better than expected. At the same time, this has been a year of record investment in aerospace technology and substantial eDrive development. The Melrose board is confident that our businesses will deliver significant upside for shareholders."

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