Melrose sees revenue and profits soar as it unlocks GKN potential
Manufacturing turnaround specialist Melrose Industries, which bought GKN for £8bn after a protracted and fractious takeover battle, has seen both revenue and profit soar as it said “important steps” were being taken in unlocking the full potential of the GKN businesses.
For the year to the end of December 2019, the company said its results were comfortably ahead of the board’s expectations for both profit and cash generation.
Revenue rose to £11.5bn from £8.6bn the year before, while profits jumped to £889m from £672m.
Melrose said: “The past year has seen us take some important steps towards unlocking the full potential of the GKN businesses and this is showing through in these results.
“While there remains plenty to do, this clearly demonstrates that the improvements we are making to the GKN businesses are starting to deliver the performance that we believe is achievable.
Justin Dowley, chairman of Melrose Industries, said: “We are delighted with the Melrose performance in 2019 and the substantial value that is being unlocked. Notwithstanding any implications of the COVID-19 outbreak, the bedrock has now been built for the GKN businesses to attain results which were not previously achievable, and, in addition, the shareholder value built up in our longer held assets is closer to being realised.
“This shows, once more, that the Melrose model thrives by investing properly in businesses and giving management the entrepreneurial freedom to succeed. This is just the start of what is possible for GKN.”
On its outlook for 2020, Melrose said: “2019 was a year of significant progress but encouragingly much remains to be done and our divisional teams are delivering. As such, we expect 2020 to be another year of good progress driven by each of the key businesses with a dual focus on efficiency programmes, to deliver operational improvements, as well as record investment in R&D to maintain technological market leadership.
“The Melrose model has always been focussed on performance improvement rather than end market growth and it is in uncertain and volatile markets that this shines through most clearly. While it is too early to be precise on the impact of COVID-19 on our businesses or wider economic conditions, we remain focussed on what we can control. Longer term, we continue to see significant value in the group and the foundations to realise this are stronger than ever. ”
