Melrose Industries PLC (LSE:MRO, OTC:MLSPF) reported “good progress” in the demerger of its GKN Automotive and Powder Metallurgy business and “materially stronger” profit and cash generation in the third quarter.
Revenue growth was 14% in the quarter, compared to sub-5% in the first half, while operating profit was said to be “substantially higher” as inflation is being “successfully recovered”.
Operating cash generation in the second half is on track to be “materially higher” than in the first half.
The proposal to split the company was announced at the half-year results in September, since when it noted there has been strong demand for automotive electrification, with bookings so far this year “trending approximately 30% higher than revenue”, of which nearly 40% are for battery electric vehicles.
GKN Automotive makes powertrains for many of the world’s largest carmakers, including 4-wheel drive systems and the 'eDrive' for electric vehicles.
Management expects to spin the Automotive and Powder Metallurgy off into a separately listed company the first half of next year.
In GKN Aerospace, which makes parts for aircraft manufacturers Boeing and Airbus, for business jets and helicopters, and components for engine makers such as Rolls-Royce, average revenue per month was said to be 6% higher than in the first half, when growth of 11% was reported, with operating margins “notably better”.
Management said Aerospace is “positioned well to benefit from the strong momentum being seen into next year”.