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Melrose Industries plc

Melrose Industries PLC Record investment in aerospace technology and eDrive development

Melrose Industries PLC (LON:MRO) today announced its interim results for the six months ended 30 June 2019.


 Adjusted1 resultsStatutory results
Continuing operations 2019 2018 2019 2018
£m £m £m £m
Revenue6,002 2,971 5,700  2,847 
Operating profit/(loss)539 284 -11 -325
Profit/(loss) before tax429 244 -128 -372
Profit/(loss) after tax330 188 -150 -330
Diluted earnings per share6.7p 6.0p (3.1)p (10.6)p


  • Melrose is trading in line with expectations for 2019, with the three main divisions of GKN on track to achieve previously announced targets
  • Adjusted1 operating profit was £539 million, which excluding the uplift from loss-making contracts was £494 million.  The statutory operating loss was £11 million; of the £550 million adjusting items, only £79 million are cash
  • Net debt leverage at 2.3x EBITDA is better than expectations due to stronger cash generation
  • Adjusted free cash inflow2 from continuing operations of £256 million
  • A new target to improve GKN’s working capital efficiency, releasing additional future free cash of £400 million within our ownership period
  • An interim dividend of 1.7 pence per share (2018: 1.55 pence) is declared, up 10%


  • Aerospace performance is significantly better than prior year period; adjusted1 operating profit growth3 of 37% and adjusted1 operating margin improvement of 2.0 percentage points
  • Aerospace increasing to 34% of Group adjusted1 profits, becoming the largest division and profit driver in Melrose
  • Record year of investment in Aerospace technology and a major announcement to create the ‘One GKN Aerospace’ organisation, to improve performance further
  • Automotive and Powder Metallurgy are maintaining profit well in an automotive industry downturn, due to decisive cost reductions
  • Significant investment made into class leading eDrive technology
  • Nortek businesses’ adjusted1 operating profit has grown by approximately 40% during our ownership
  • Nortek Air & Security has strong fundamentals, HVAC has signed a significant new contract for its industry leading new proprietary StatePoint Technology®
  • Security & Smart Technology is challenged by US tariffs and market headwinds
  • Many operational improvement programmes and capital investment projects are underway to help improve performance further, while good progress is being made on resolving the GKN loss-making contracts

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

“These results show the initial fruits of the ‘improve’ stage of Melrose’s ownership of GKN and, with the overall GKN margin increasing positively, we are excited about what is possible.  The performance is in line with expectations and leverage is better than expected. At the same time, this has been a year of record investment in Aerospace technology and substantial eDrive development.  The Melrose Board is confident that our businesses will deliver significant upside for shareholders.”

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 inflow excludes the one-off pension contributions, restructuring spend and cash used in discontinued operations

3.    Growth is calculated at constant currency against 2018 results, excluding the impact of loss-making contracts in both periods for consistency

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