US acquisition helps triple revenue for turnaround group Melrose
The impact of a transformational year for Warwickshire manufacturing turnaround specialist Melrose Industries has been outlined in the group’s annual results.
Revenue for the year to December 31, 2016 was £889.3m (2015: £261.1m) and, despite declaring a statutory loss before tax of £69.3m (2015: £30.7m, the underlying pre-tax profit was £96.4m (2015: £2.4m).
In February 2016, the company returned £2.4bn to shareholders from the £3.3m sale of its Elster business the year before.
In August last year, the company went some towards rebuilding its portfolio following the sale of Elster by acquiring US-based Nortek for £2.2bn.
Nortek is a global manufacturer of innovative air management, security, home automation and ergonomic and productivity solutions. The deal was financed from the net proceeds of a successful rights issue raising £1.6bn, with the balance funded through debt of £0.6bn.
Melrose said the Nortek acquisition, which, when combined with its other operation, Brush, had more than tripled the revenue of the group.
Nortek’s Security & Smart Technology and Ergonomics divisions were said to have performed particularly well, although all businesses were responding well to the improvement measures implemented by Melrose to date.
Other portfolio business Brush, continues to face challenging end-market conditions but Melrose said it remained positive about its long-term prospects.
Melrose is proposing a final dividend of 1.9p per share (2015: 0.5p), making a total of 2.2p for the year (2015: 1.0p), in line with its progressive annual dividend policy. The dividend will be paid on May 16 to shareholders registered by April 7.
Christopher Miller, chairman of Melrose Industries, said: “This has been a tremendous year for Melrose and we are delighted with the performance of Nortek which is exceeding expectations.
“All aspects of the business are being improved and its prospects are better than originally thought. As a result we have started looking for the next acquisition that will materially enhance shareholder value.”
Looking ahead, he said the group continued to operate in an uncertain and challenging environment. Globally, downside risks stemmed from weak investment and heightened geopolitical uncertainty in major economies.
“Against this backdrop we believe that there are some exciting acquisition opportunities and, taken together with the benefits already seen from improvements implemented across Nortek, we are positive about the potential of the Melrose Group for 2017.”
