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(Alliance News) - Melrose Industries PLC on Thursday said it was trading ahead of expectations, with better profit margins and scope on its balance sheet to return more cash to shareholders next year.
Shares in Melrose Industries jumped 5.0% shortly after the open in London on Thursday to 180.50 pence each, making it the top performer in the FTSE 100 index.
For the six months to June 30, revenue rose to GBP3.54 billion from GBP3.39 billion last year and its pretax loss narrowed to GBP256 million from GBP720 million.
Melrose declared an interim dividend of 0.75p per share, having skipped its payout last year. It did recently, however, unveil a GBP730 million return to shareholders after completing the sale of its Nortek Air Management division.
Melrose said its businesses are "progressing well" in recovering form the pandemic.
"It is pleasing to see our GKN businesses improving their underlying performance, delivery record and customer relations," the blue chip industrial turnaround specialist said.
Melrose continued: "The semi-conductor shortage, whilst not impacting directly, continues to weigh on the production output of the automotive sector and GKN Automotive and GKN Powder Metallurgy are not immune from that.
"However, as demonstrated at the recent Capital Markets Day, having made a number of necessary structural changes over the past 18 months, both of these businesses are performing strongly, have world-leading technology and, with some further market recovery, are well on their way to achieving their margin targets ahead of schedule."
Melrose also noted GKN Aerospace's performance has been "encouraging" and is making "steady progress".
Melrose noted its free cash flow generation in the first half was GBP75 million.
Chair Justin Dowley said: "We are continuing to see recovery in all our businesses with trading ahead of expectations. Encouragingly, our Aerospace business is now weighted towards the expected narrowbody recovery. Our Automotive and Powder Metallurgy businesses are poised for strong growth as soon as the well publicised chip shortage abates and the progression in margins is ahead of plan with more to come.
"As with all its promises, Melrose has delivered its acquisition funding commitment to GKN pensioners early. We have scope on our balance sheet to return more money to shareholders next year and we are excited by the upcoming possibilities."
By Paul McGowan; paulmcgowan@alliancenews.com
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