Interim Management Statement

RNS Number : 4326G

Melrose PLC

12 May 2011

 



12 May 2011

Melrose PLC

INTERIM MANAGEMENT STATEMENT

Ahead of its Annual General Meeting being held later today, Melrose PLC issues the following Interim Management Statement for the period from 1^st January 2011 to date.

OVERVIEW

The positive trends in our businesses reported in our Annual Results Statement in March have continued and we are optimistic for another year of good performance.  Sales are up 8% on the comparative period last year at constant exchange rates excluding the businesses sold in February, and orders are coming in faster than that.  This, together with new product introductions, increased investment and continuing control over costs should lead to further improvement in operating performance in 2011.  There have been no material changes to the financial position of the group in this period.

Current trading is running marginally ahead of management expectations.

ENERGY

Brush Turbogenerators' order intake is up by 15% compared with the same period last year.  Due to the phasing of existing customer orders sales were down over this particular period last year but pleasingly operating margins have nevertheless improved as the result of further efficiency gains.  Irrespective of the phasing for this period the order book for this business makes us confident that we will see sales growth in 2011 and this will lead to improved profits.

Feedback from discussions with customers have also indicated their confidence of further good growth in 2012.

The integration of Brush Transformers into this business has gone well and the cost savings we expected are being achieved.

Sales at Marelli have improved on last year and there are signs that their marketplace is recovering.  Profits are marginally down after the set up costs of opening the new Malaysia factory and failure to recover some raw material costs on certain lower margin products. The medium term opportunity for this new factory remains very positive and the lower overhead structure presents a strategic opportunity for Marelli to grow its sales presence in the region.

Hawker Siddeley Switchgear has an improving trend in sales and has seen a 50% improvement in order intake over last year. The challenge for this business is efficiently fulfilling its order book for 2011. We expect sales and profits to improve in 2011.

LIFTING        

Bridon has performed satisfactorily in this period.  Bridon's two key product sectors are oil & gas and mining which together on average account for over half of its sales and, being more complicated technical products, have a higher contribution.  Mining has remained a strong market in 2011 and order intake for this year has remained at the same high level as 2010. Encouragingly, whilst the timing is still uncertain, there are signs of a recovery in offshore oil & gas.  As a result order intake for oil & gas is up on the equivalent period last year.

We are looking to invest in a number of projects at Bridon and are making good progress on its new factory focused on sales to the offshore oil & gas market.

Crosby is experiencing a strong recovery.  Its sales and order intake are both up by approximately 20% on last year. There is no sign that the recovery trend is slowing and the order book remains strong.  Crosby management are confident that their better service, customer lead times and products are leading to market share growth especially in North America.

The strategy to improve sales in international markets is beginning to bear fruit and, albeit from a low base, sales were up by 15% over the equivalent period in 2010.

The processes of better integration of Europe and greater operational integration between the US and Canada have both gone very well and these are leading to better sales and profits.

There is a substantial opportunity to improve Crosby further by investment. This will be spread across a number of projects rather than one large investment.  In 2011 approvals for capital expenditure by Crosby have increased sharply.

DYNACAST

Dynacast continues to trade well. Sales have continued to grow and are up 8% year on year notwithstanding last year's strong performance.  Profits are up by more than this percentage and margins have continued to increase.  Whilst Dynacast by its nature does not have a long order book there is no sign that it will not continue with this progress in 2011.

As stated in the Annual Report, a sale process for Dynacast is underway and good progress is being made.  However, we will only sell this excellent business for a price that fully reflects its prospects. In the event that we do proceed with a sale it is our intention to return the proceeds to shareholders.

OTHER INDUSTRIAL

In February this year, the sale of Brush Traction, Logistex UK and Madico for a total consideration of £20.7million was announced. 

Truth has experienced a difficult start to the year - the US housing market is still very difficult and at best slow recovery is anticipated this year.  Truth is well placed to recover strongly as market conditions improve and there is continued progress in improving its efficiency.  Harris and MPC have both benefited from substantial increases in their order intakes this year on the back of investment in new product development together with improved market conditions and further improvements are expected in 2011.

OUTLOOK

Although macroeconomic conditions remain uncertain, overall our businesses continue to make good progress.  Strong order intake supported by increased capital investment give us confidence of further progress in 2011.

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Enquiries:

M:Communications                             020 7920 2343

Nick Miles

Ann-marie Wilkinson

Andrew Benbow

 

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