Engineering business owner Melrose Industries (MRON.L) said on Thursday there were signs of a pick-up in some of its markets, excluding aerospace, after the coronavirus crisis slashed its first-half profit by 90% and prompted job cuts.
FILE PHOTO: Branding is seen outside the headquarters of GKN in Redditch, Britain, March 12, 2018. REUTERS/Hannah McKayShares of the FTSE 100 company gained 10% by 0744 GMT as investors reckoned the worst may be over after the owner of UK-based car and aerospace parts maker GKN said its automotive and key Nortek Air Management businesses were trading at the higher end of expectations over the summer months.
The stock has lost around half of its value this year.
Melrose has had to restructure its pandemic-hit GKN aerospace division, which employs 18,550 people globally, and it said a “significant” number of jobs would be cut across the United States, Britain, Europe and China.
Consultations were underway and due to be completed by the first-quarter of 2021, it said without giving a number of planned cuts.
“These are extraordinary times which we have addressed with rigorous cash-management and decisive restructuring actions; recently, and encouragingly, we have started to see trading improving in some key end-markets,” said Chairman Justin Dowley.
Melrose first announced the job cuts in July after the pandemic dragged it to a second-quarter loss but had not given any detail on where they would be.
“Telling, for us, is the absence of incremental bad news in the release, a sign that, in this most challenging of years, momentum is turning,” analysts at J.P.Morgan Cazenove said in a note.
Specialising in buying underperforming businesses and turning around and finding new owners for them, Melrose said it expects 2021 to likely bring more acquisition opportunities.
It generated 213 million pounds in adjusted free cash flow in the first-half of the year.
Adjusted operating profit in the six months to June fell to 56 million pounds from 541 million pounds on adjusted revenue of 4.36 billion pounds, down 25.8%.
It added that its Nortek Air Management business, which will be reviewed for strategic options early next year, grew sales by 13% in July and August.