Melrose boosted by Elster acquisition in 2012

Industrial manufacturing conglomerate Melrose saw revenues rise by a half in 2012, helped by last year's acquisition of gas metering group Elster.

Industrial manufacturing conglomerate Melrose saw revenues rise by a half in 2012, helped by last year's acquisition of gas metering group Elster.

Revenue from continuing businesses totalled £1.55bn last year, well ahead of the £1.01bn reported the year before.

Elster, a world leader in metering products with nearly 7,000 employees, was acquired in August 2012 for an enterprise value of £1.8bn. It generated some £411m in turnover in just four months of ownership last year.

Advertisement - Article continues below

While it is still early in Elster's integration process, the company said that it is "already very pleased with the business and the potential for improvement over the next few years".

Profit before tax surged from £155m to £214m, while adjusted earnings per share rose from 15.8p to 16.1p, with operating profit increases experienced in all three divisions of existing Melrose.

However, the operating margin fell from 16.1% to 15.7% over the year, mainly due to the inclusion of Elster, whose margins are lower than average at this stage.

Chairman Christopher Miller said: "We are very pleased with Elster and are already one year ahead of our improvement plan, increasing margins faster than expected.Existing Melrose businesses have performed well and Elster is proving to be another great opportunity to create more value for Melrose shareholders."

The company is to pay a final dividend of 5.0 per share, higher than the 4.8p paid out the year before. The total dividend was lifted from 7.4p per share to 7.6p per share.

OutlookThe firm's outlook was cautiously optimistic, with Miller hailing the potential of Elster. He said: "I said last year that we were optimistic about identifying a suitable acquisition to continue the excellent growth of the group.We firmly believe that Elster represents such an opportunity."

As for the Energy division, Melrose reported in November that order books had weakened. While this continues to the case, the company said it remains confident of the outlook and expects further progress this year.

"Economic recovery is not yet in sight in Europe, nor completely established in the US, but our mix of businesses with their strong positions in good end markets and opportunities for improvement gives us confidence for the future."



Investment strategy

Broker safety – your questions answered

Cris Sholto Heaton answers more of your questions about the safety of stockbroker accounts
25 Mar 2020
Investment strategy

How demographics affects stock valuations

New research suggests that stock and bond valuations are driven by the age of the population – at least in the US.
24 Feb 2020
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020

Why investors should be “cautiously bullish” for 2020

Analysts have been out in force making rosy predictions for stockmarkets in 2020, but while there is certainly a case for optimism, investors should r…
17 Jan 2020

Most Popular


The end of the bond bull market and the return of inflation

Central bank stimulus, surging post-lockdown demand and the end of the 40-year bond bull market. It all points to inflation, says John Stepek. Here’s …
30 Jun 2020

This chart pattern could be extraordinarily bullish for gold

The mother of all patterns is developing in the gold charts, says Dominic Frisby. And if everything plays out well, gold could hit a price that invest…
1 Jul 2020
Global Economy

How “pent-up demand” could drive a V-shaped economic recovery

“Pent-up demand” is usually a myth. But not this time. The Covid lockdown has created genuine pent-up demand, says Merryn Somerset Webb. That’s now be…
29 Jun 2020