- Semiconductor shortage continues to dog supply chains
- MIxed bag among Melrose's different divisions as aerospace improves
Melrose (MRO) saw its share price edge lower after the engineering company issued a mixed trading update stating that its aerospace business continues to improve but the automotive arm faces ongoing disruption caused by a lack of semiconductors.
The company, which bought engineering giant GKN through an £8.1 billion hostile takeover in 2018, said revenue at its aviation arm was 16 per cent higher in the three months to September 30, but its automotive and powder metallurgy businesses were suffering from higher short-term order cancellation rates as customers struggle to build cars due to chip shortages, with supply chain issue “very difficult to plan for, or predict”.
Restructuring efforts mean that even if orders for light vehicles remain at 2020’s subdued levels, these divisions should be able to double last year’s margins, the company said.
Melrose has completed the disposal of Nortek Control for $285 million (£209m) and said all remaining divisions continue to generate cash, meaning it will consider another capital return to investors in March. It returned £730m in cash via share buybacks in August.
