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(Alliance News) - Melrose Industries PLC on Thursday swung to loss for 2020 as its GKN Aerospace unit was dented by the pandemic, though the industrial turnaround specialist did resume payouts with a proposed final dividend for the year.
Revenue for 2020 fell to GBP8.77 million from GBP10.97 billion in 2019, with the firm swinging to a pretax loss of GBP535 million from a GBP106 million profit the year before.
Despite the swing to profit, Melrose noted that trading was at the top end of management expectations throughout the second half of 2020.
"Excluding Aerospace, the other divisions on average achieved increased second half revenue over 2019 of 2% and 9% in the final quarter," Melrose noted.
The year started well, Melrose said, but the hit from the pandemic in March was "both immediate and significant".
GKN Aerospace had a "very difficult" year, with sales down 27%. The company added that no recovery has been seen in the civil aerospace market and this is not expected to change in 2021.
Melrose proposed a final dividend of 0.75 pence per share of 2020 given the "excellent" cash generation achieved in the year - adjusted free cash generation was GBP628 million, up 6% on 2019, prior to GBP172 million of restructuring costs - and said it is pleased the firm has returned to paying a dividend. Melrose paid no interim dividend for 2020, and no final dividend for 2019, though did pay a 2019 interim dividend of 1.7p.
A progressive dividend policy is intended to be reintroduced for future periods, Melrose said.
Elsewhere, Melrose said it recently started a sale process for Nortek Air Management. It said the business is trading very strongly, but there can be no certainty a disposal will be completed.
Looking ahead, Melrose said the aerospace sector was hard hit and a by the Covid-19 pandemic and a recovery "looks some way off" while global travel restrictions remain. Nonetheless, it said GKN Aerospace remains a "very good business" with a growing Defence division and the company is taking improvement steps to ensure it is well positioned for when the recovery does emerge.
"Whilst the Covid-19 crisis has had a major detrimental effect this year, Melrose has generated record cash flows and continued to invest to improve our businesses. All of this positions the group well for a good recovery and strong performance in the future," said Chair Justin Dowley.
Shares in Melrose were up 1.1% at 178.85 pence in the FTSE 100 on Thursday.
By Lucy Heming; lucyheming@alliancenews.com
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