Shares in engineering turnaround specialist Melrose Industries (MRO) climbed 4 per cent on the back of these half-year figures - which beat analysts' expectations. That solid performance was significantly driven by Elster, the German utility meter business that Melrose acquired last summer.
Indeed, the company was able to achieve its 16 per cent three-year operating margin target at Elster in just one year and Elster's operating profit increased by over a third year on year to £91.2m. Melrose's lifting business put in a positive showing, too, which offset a minor decline in the energy division.
Management is also making excellent progress with the disposal of businesses that have already been rehabilitated. Post period-end, for instance, it sold the Truth and Marelli businesses for a combined price of £312m - a fourfold increase on the original equity investment in those companies. Melrose is also currently considering a special return of cash to shareholders if the Crosby business is sold - discussions are ongoing and analysts from broker Investec Securities estimate that this business is currently worth £580m.
Investec has upped its full-year estimates and now expects adjusted pre-tax profit of £304m, giving EPS of 17.1p, rising to £330.5m in 2014, with EPS of 18.6p (from £212m and 16p in 2012).
MELROSE INDUSTRIES (MRO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 295p | MARKET VALUE: | £3.74bn | |
| TOUCH: | 294-295p | 12-MONTH HIGH: | 297p | LOW: 198p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 74 | |
| NET ASSET VALUE: | 149p* | NET DEBT: | 56% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 0.47 | 31.2 | 3.20 | 2.60 |
| 2013 | 1.02 | 92.5 | 5.20 | 2.75 |
| % change | +117 | +196 | +63 | +6 |
Ex-div: 18 Sep Payment: 17 Oct *Includes intangible assets of £3.1bn, or 244p a share | ||||
