Melrose Industries surges as revenue triples on Nortek deal

Shares in Melrose Industries surged on Thursday as it said revenues more than tripled, while underlying pre-tax profit grew and the company said it was on the lookout for its next acquisition.

For the year to the end of December, revenue rose to £889.3m from £261.1m, boosted by its acquisition of US ventilation maker Nortek Industries.

Melrose said that Nortek, which was acquired on 31 August 2016 for an enterprise value of £2.2bn, is responding well to its ownership and has materially outperformed, albeit in a short four-month period.

Underlying pre-tax profit surged to £96.4m from £2.4m, but the company declared a statutory pre-tax loss of £69.3m, wider than the £30.7m loss the year before.

The company proposed a final dividend of 1.9p per share, up from 0.5p the year before, taking the total dividend for the year to 2.2p, up from 1.0p.

Chairman Christopher Miller said: “This has been a tremendous year for Melrose and we are delighted with the performance of Nortek which is exceeding expectations. All aspects of the business are being improved and its prospects are better than originally thought. As a result, we have started looking for the next acquisition that will materially enhance shareholder value."

The company said it continues to operate in an uncertain and challenging environment, with downside risks stemming from weak investment and heightened geopolitical uncertainty in major economies.

Against this backdrop, Melrose reckons there are some exciting acquisition opportunities and, taken together with the benefits already seen from improvements implemented across Nortek, it is confident about its potential in 2017.

At 1015 GMT, the shares were up 12.5% to 245.75p.