Mixed performance for GKN owner Melrose

The industrial turnaround specialist said it has traded in line with expectations for 2019.

GKN 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.

The car parts division of the GKN business that Melrose bought last year counts Volkswagen, GM and Ford among its customers.

By division, the company said Aerospace, part of the acquisition of GKN, has achieved sales growth of over five per cent in the four months to the end of October compared to the same period last year, outperforming the expected longer-term average growth rate. Melrose also noted "good margin improvement" in this division.

Melrose's controversial £8.4 billion deal for GKN, which includes Melrose's Aerospace, Automotive, and Powder Metallurgy units, was completed in early 2018.

Turning to Automotive, Melrose said it has delivered a higher profit and margins, but sales were down by five per cent year-on-year. In Powder Metallurgy, meanwhile, sales fell by 13 per cent over the four-month period.

Both divisions were hurt by a strike by workers at General Motors Co in the US, Melrose said. The company said Powder Metallurgy sales would have been in line with board expectations had it not been for the strike.

Nearly 50,000 GM workers downed tools in mid-September, launching the biggest labour dispute to hit the automaker in more than a decade. The strike ended in October after a 40-day walkout.

Finally, the Nortek Air and Security division, which did not come via the GKN deal, experienced an improvement year-on-year, Melrose said, achieving modest sales growth with margins similar to those in the same period last year.

Melrose chairman Justin Dowley added: "Some macro conditions could be more helpful, but this has not stopped us continuing to transform the GKN businesses, delivering another trading period in line with expectations, and achieving better trends than seen in the first half of the year.

"We are excited about what is possible and confident in our ability to unlock significant further shareholder value."

Melrose will report 2019 results on March 5 next year.