Melrose trades ahead of expectations as loss narrows

The FTSE 100 group reported a statutory pretax loss of £151m for the six months to the end of June compared with a £585m loss a year earlier as revenue rose to £3.54bn from £3.39bn.

Adjusted pretax profit was £109m compared with an £11m loss a year earlier. Melrose declared an interim dividend of 0.75p a share.

Net debt fell to £300m at the end of June from £3.4bn a year earlier. Including a £729m return of capital to be paid on 14 September net debt was £1.03bn.

Melrose's GKN Aerospace business was hit hard by the Covid-19 crisis, prompting the company to make big job cuts after promising to invest in the business when it bought GKN in a hostile takeover in 2018. The company said the aerospace division was recovering and it was confident margin expectations would be achieved as volumes recover.

Simon Peckham, chief executive, said: "While GKN Aerospace results do not yet reflect the improvements already made to the underlying business, largely because of the continued Covid-19 impact on the sector, there are significant actions being undertaken to drive sustainable profitability, with more to come in the second half and through 2022. Improving the performance of our aerospace business is a continuing focus for the months to come."

GKN's automotive and powder metallurgy businesses were affected by the impact on vehicle production of a global dearth of computer chips that has hit the automotive industry. Melrose said the units were poised for strong growth once the shortage abates.