Melrose swings to half-year loss on GKN costs
The group posted a pre-tax loss of £303m.
Melrose Industries has swung to a half-year loss after booking hefty costs linked to its controversial £8 billion hostile takeover of engineering giant GKN.
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The group posted a pre-tax loss of £303 million in the six months to June 30, compared with a £48 million profit in the same period last year.
Melrose said the loss “occurred due to booking significant acquisition related charges” linked to GKN.
However, stripping out the exceptional costs, adjusted pre-tax profit was up from £131 million to £240 million.
Revenue jumped from £1 billion to £2.9 billion and chairman Christopher Miller said: “Melrose is delighted with the acquisition of GKN, which has the significant potential for improvement which we identified when we made our offer.
“Plans have been agreed and are now being implemented to realise the full potential of GKN’s world-leading, but currently under-developed, businesses. This is an exciting opportunity for Melrose, its shareholders and all other stakeholders.”
The group added that it has found no “black holes” in GKN’s accounts and it is flourishing free from the shackles of “head office bureaucracy”.
Shares were up 4.5% in morning trade as investors welcomed the results.
Melrose also revealed it will invest in a new global technology centre for aerospace near Filton.
And the group is exploring a sale of its powder metallurgy unit, which could glean £1.8 billion.
Melrose’s takeover of GKN drew intense union and political anger.
Its victory earlier this year brought to a close a bitter battle that had raged for months, with unions and MPs warning over job cuts, asset-stripping and national security concerns throughout the takeover saga.
The firm’s board also said on Thursday that the role of chairman will become non-executive, with Mr Miller handing over the role to Justin Dowley who will serve as Melrose’s inaugural non-executive chairman.