A £629mln write-down of poorly performing contracts that came with its GKN acquisition pushed Melrose Industries PLC (LON:MRO) deep into the red in 2018.
The group also warned its FKI business is continuing to struggle and its value was also written down.
READ: Melrose Industries raises around £200mln from two disposals including a GKN powertrain business
Melrose posted a loss of £550mln in 2018 on sales of £8.6bn, which included an eight months contribution from GKN.
Without the contract provision, there would have been a profit of £782mln, though the division housing FKI and generator arm Brush posted a loss of £159mln.
Simon Peckham, chief executive, said: “Alongside the continued progress in Nortek, we believe that our businesses will deliver some of the significant upside we see in 2019 despite continuing market volatility, particularly for Automotive.”
Melrose also committed to being a ‘responsible custodian’ of GKN’s pension scheme, which had a deficit of £588mln at the end of 2018.
The acquisition specialist acquired UK engineering stalwart GKN after a bitterly contested takeover battle that concluded with a narrow victory in March last year.
The offer was worth £8.1bn and at the time Melrose said the merger would create a UK industrial powerhouse with a market capitalisation of over £10bn.
Since then, however, Melrose shares have dropped sharply and were valued at 190p or £8.7bn today.