Volatile economy reducing manufacturing investment says Melrose

MELROSE Industries, the Warwickshire-based turnaround specialist, has said it faces a number of challenges targeting suitable acquisitions.

The Alcester company said with increasing uncertainty surrounding the world economy, the manufacturing sector was suffering from reduced investment levels.

2015 was an exceptional year in the company’s history with more than £2.6bn returned to shareholders following the disposal of its Elster business for £3.3bn and the prior sale of portfolio business Bridon.

The Elster disposal leaves a big hole in the company’s portfolio as three quarters of the group’s revenue was generated by the business, which is a world leader in measuring and improving the flow of natural gas, electricity and water.

Just how big that hole is can be seen by the fact that up to the date of its disposal, Elster had contributed £1,107.4m in revenue during 2015.

The volatile economy climate was evidenced by revenue from its continuing businesses coming in at £261.1m (2014: £324.3m), with headline operating profit (before exceptional costs, exceptional income and intangible asset amortisation) of £20.8m (2014: £47.7m).

Of Melrose’s remaining business, Brush in particular experienced a challenging year.

Chairman Christopher Miller outlined the position of the group moving forward.
He said: “Across the manufacturing sector uncertainty is leading to reduced business investment.  Brush is not immune to these economic challenges.  However, we believe that Brush is well positioned to capitalise on new business opportunities and to benefit from any improvement in market conditions.
 
“The search actively continues for businesses which meet our investment criteria.  The board is looking forward to another successful chapter in the group’s history and, in due course, to invite shareholders to invest in the next project.

“Recent conditions in the global equity markets have only confirmed your board’s view that 2016 could be an exciting year for Melrose and we are confident that a suitable acquisition will be identified, bringing with it another opportunity to create substantial value for shareholders.”