Melrose Industries PLC (LSE:MRO, OTC:MLSPF) will seek investor approval in late March to spin off GKN Automotive and focus on GKN Aerospace, confirming that cost-cutting offset inflation in the past year.
Unaudited figures for the ‘DemergerCo’ businesses, which include the automotive and powder metallurgy arms, suggests sales of £5.2bn and operating profits of £320-330mln, which would be well ahead of the City’s consensus forecast of £308mln.
The new business will be renamed Dowlais Group PLC (LSE:DWL), it was later revealed.
The FTSE 100-listed group said the demerger is “progressing well” with the intention to complete the process once shareholder approval is gained, with a vote at the end of March.
A capital markets day event is being held in London for investors and analysts this afternoon.
Following the split, Melrose will be focused on GKN Aerospace, which makes components for aircraft manufacturers Boeing and Airbus, for business jets and helicopters, and engine makers such as Rolls-Royce.
The update confirmed that aerospace has traded "in line" with expectations, with "continued strong momentum into 2023".
Shares fell 1% to 147.85p.
Broker Numis said Aerospace was enjoying “good double-digit momentum” in the new year.
Analysts said their current sum-of-the-parts still pointed to circa 27% upside at a target price of 190p.
** Update: adds new company name **