Melrose Industries’ net debt reduced by £93 million


Melrose Industries PLC (LON:MRO) has announced its interim results for the six months ended 30 June 2020.


Continuing operationsAdjusted1 results
Adjusted1 results
Statutory results
Statutory results
Revenue4,359 5,8754,121 5,573 
Operating profit/(loss)56 541(581)
Profit/(loss) after tax(32)332(560)(131)
Diluted earnings per share(0.7)p6.8p(11.5)p(2.8)p


  • The Group made an adjusted1 operating profit of £56 million in the Period.  The statutory operating loss was £581 million; of the £637 million adjusting items, only £99 million are cash related
  • Trading over the summer months has been at the higher end of the Board’s expectations, particularly in automotive and key Nortek markets
  • Cash generation has been strong in the Period with £213 million of adjusted1 free cash flow2
  • In addition to the significant working capital inflow in H1, the Group expects a further c.£300 million of efficiency improvements in working capital to be delivered
  • Net debt1 has been reduced by £93 million3 and the committed bank facility headroom has increased to nearly £1.2 billion at 30 June 2020 excluding the c.£300 million of cash in hand
  • Improved banking terms have been unanimously agreed with the Melrose lending bank syndicate, giving the flexibility if required over the medium-term to continue to improve the businesses
  • Restructuring projects are well underway that will improve the Group’s trading performance by over £100 million next year.  More cost saving projects are to come and there are substantial margin improvement opportunities across the GKN businesses
  • Investment in ground-breaking, energy efficient technology has been maintained, including electric and hydrogen powered aircraft technology; eDrive automotive systems; advanced 3D printing capabilities; and Nortek Air Management’s revolutionary StatePoint Technology®
  • Whilst the Melrose Board understands the importance of dividends to shareholders and is encouraged by the strong cash performance, it does not consider it appropriate to pay an interim dividend to shareholders this year


  • A substantial reduction of the Aerospace cost structure is underway, to significantly improve the business performance in 2021 without relying on sales growth.  Sales in Aerospace reduced by 18% in the Period3; however, Defence, which equates to around a third of the business, continued to grow
  • There are a number of encouraging signs of recovery in Automotive and Powder Metallurgy with recent trading in China ahead of last year; North America is also improving quickly and there are some positive signs in Europe, although the full speed and shape of improvements still remains uncertain.  Automotive and Powder Metallurgy sales were down 36% in the Period3
  • Nortek Air Management is trading well; its performance has been less impacted by COVID-19 and sales in July and August were up 13% on last year3.  New business wins are proving to be significant and are both enhancing the quality of the business and giving a strong order book into next year
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1.    Considered by the Board to be a key measure of performance.  The adjusted results are described in the glossary to the Interim Financial Statements

2.    Adjusted free cash flow in the Period excludes restructuring and cash used in discontinued operations

3.    Growth is calculated at constant currency against 2019 results

Justin Dowley, Chairman of Melrose Industries PLC, today said:

“These are extraordinary times which we have addressed with rigorous cash management and decisive restructuring actions; recently, and encouragingly, we have started to see trading improving in some key end markets.  Crucially, we own good businesses with significant improvement opportunities and have an experienced management team with an excellent track record.  We have delivered good returns in tough times before and as we continue to make the strategic changes needed to position our businesses within their changed market environments, we are confident of doing so again.”

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