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Melrose impresses with positive update

Melrose, the industrial conglomerate which buys and sells manufacturing businesses, impressed investors on Wednesday after reporting that its recently acquired Elster business has achieved further improvements and as such performed significantly ahead of the same pre-acquisition period last year.

Melrose, the industrial conglomerate which buys and sells manufacturing businesses, impressed investors on Wednesday after reporting that its recently acquired Elster business has achieved further improvements and as such performed significantly ahead of the same pre-acquisition period last year.

The business's revenue was slightly ahead in the year-to-date, while the headline profit and operating margin were both up on last year.

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In a statement the group said: "Further savings in central costs have been achieved in the Period and as a result the on-going run rate for Elster central costs has now reduced from 2% of Elster revenue at acquisition to a level which is immaterial.

"It is also particularly pleasing to note that improvements are coming through in each of the three businesses within Elster, namely Gas, Electricity and Water.

"The board remains delighted with the prospects for Elster and is confident it is proving to be another successful acquisition."

Divisionally, the Lifting business performed in line with expectations; after a slow start to the year sales in the period recovered to be only slightly down compared to the same period last year.

The profit performance for the Energy division for the period was flat compared with 2012, with sales being 1.0% lower.

The group as a whole has delivered an encouraging performance, Melrose said, and is "confident of meeting expectations and improving performance this year".

Overall, trading is in line with expectations, with revenue 1.0% lower than last year, at constant currency, while the operating margin was higher.

Net debt is expected to rise "a little" at the half year from the levels seen at the year-end, but are expected to reduce again to similar levels to last year by the end of 2013.

The share price rose 3.79% to 254.40p by 08:55 Wednesday.

NR

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