GKN owner sees losses narrow

The industrial turnaround specialist reported a £128 million pre-tax loss for the six months ended June 30, well below its £372 million loss the year before.

Revenue for the period was twice what it had been, totalling £5.7 billion versus £2.85 billion.

The big increase in revenue was the result of Melrose's hostile takeover of GKN in 2018, which has a wheels and structures plant at the Hadley Castle Works in Telford as well as other factories dotted around the Midlands, with about 1,000 workers

As well as wheels and structures, GKN's other main divisions are aerospace, automotive, and powder metallurgy.

Aerospace revenue shot up to £1.89 billion from £713 million and automotive revenue soared to £2.17 billion from £896 million. Powder metallurgy revenue rose to £574 million from £254 million.

Net operating expenses increased to £1.16 billion from £842 million and finance costs rose to £126 million from £51 million, however.

"The Melrose board considers the adjusted results to be an important measure used to monitor how the businesses are performing as they achieve consistency and comparability between reporting periods when all businesses are held for the complete reporting period," the company said.

In terms of outlook, Melrose is confident in meeting its annual expectations, although it will be challenged by tariffs and downturn in the automotive sector. The firm intends to improve business performance though investment, as well as better cash management and cost control.

Chairman Justin Dowley said: "These results show the initial fruits of the 'improve' stage of Melrose's ownership of GKN and, with the overall GKN margin increasing positively, we are excited about what is possible.

"The performance is in line with expectations and leverage is better than expected. At the same time, this has been a year of record investment in aerospace technology and substantial eDrive development. The Melrose board is confident that our businesses will deliver significant upside for shareholders."

Melrose's £8.4 billion bid for GKN was accepted by shareholders back in March last year.

Its victory 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.