The £3.3bn sale of Elster to industrial giant Honeywell completed in December helped turnaround specialist Melrose Industries (MRO) pay off its borrowings and pay a big wedge of cash to shareholders. But adjusted operating profit, excluding the Elster deal, fell by more than half to just under £21m as its remaining business, generator manufacturer Brush, continued to struggle.
Brush continues to experience generally tough trading conditions, but also disappointment over a £30m turbogenerator manufacturing plant near Shanghai, which became operational in March. A delay in the Chinese government's switch from coal to gas-fired power stations has set back sales, and the development of the business is up to two years behind original projections.
Elster was a good example of the value of the group's 'buy, improve, sell' business model. It also contributed £1.1bn of revenue to these figures, before the sale. So the outlook is all about the deals that can be made. Chief executive Simon Peckham notes the attractive valuations in current market conditions, so all eyes are on the company's next acquisition.
Broker JPMorgan Cazenove has updated its forecasts due to lower than expected pension interest charges and now anticipates 2016 adjusted EPS of 9p, compared with a loss per share of 1.6p in 2015.
| MELROSE INDUSTRIES (MRO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 335p | MARKET VALUE: | £486m | |
| TOUCH: | 335-336p | 12-MONTH HIGH: | 345p | LOW: 243p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | na | |
| NET ASSET VALUE: | 1,962p | NET CASH: | £2.45bn | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)** |
|---|---|---|---|---|
| 2011 | 1.08 | 91 | 13.8 | 7.4 |
| 2012 | 1.05 | 6.3 | -0.9 | 7.6 |
| 2013 | 1.47 | 144 | 7.9 | 7.8 |
| 2014 (restated) | 0.32 | 12.5 | 0.8 | 5.3 |
| 2015 | 0.26 | -30.7 | -1.6 | 2.6 |
| % change | -19 | - | - | -9 |
Ex-div: 8 Apr Payment: 16 May *Includes intangible assets of £273m, or 188p a share **Not including return of capital in January 2016 worth 240p a share. Dividend has now been rebased to reflect the size of the group. | ||||
