Melrose to return 600m pounds to shareholders post disposal

19th Nov 2013 07:44

- Capital return announced following Crosby, Acco disposals- Elster performing strongly in Q3- Revenue growth remains 'hard to find'Melrose Industries, the industrial investment firm, has revealed that it will return around 600m pounds to shareholders next year following the disposals of the Crosby and Acco businesses from the Lifting division. The units, which were initially acquired as part of the purchase of FKI in 2008, are being sold to a company controlled by affiliates of Kohlberg Kravis Roberts & Co for $1.01bn (£627m), and completion is expected before the end of the year, the FTSE 100 firm announced last month.In a statement on Tuesday morning, Melrose said it is contemplating a return of capital in the region of £600m if the sale completes as expected, "although the precise quantum of this has not yet been decided".Melrose has seen the realisation of value from around half of the FKI businesses, representing a quarter of the company's headline operating profit in 2012. "In total these four businesses will have delivered more than a tripling of shareholder value during the five years of Melrose's ownership," the firm said.Current tradingMelrose said that trading across the wider group for the year has been in line with forecasts in the third quarter, with Elster performing strongly and the remnants of the FKI division trading as planned.Elster, the gas, electricity and water metering business it acquired last year, has seen sales and orders rise 4% and 2% on last year, after adjusting for the market closures in the Water business. On completion of the sale of Crosby and Acco, the three Elster businesses will form two thirds of group revenue.In Energy, trading was "in line" with expectations with early signs of improvement being noted in the market following a difficult sales environment.Meanwhile in the Lifting division, where industrial wire and rope unit Bridon is now the sole subsidiary, medium-term prospects remain good though the company has experienced a slowdown in mining orders which make up around 20% of Bridon's sales.Looking ahead, Melrose said that the outlook for Elster is "encouraging" and improvements are expected in other divisions in 2014. "Revenue growth across the group still remains hard to find but there are some early signs that 2014 could also be a better sales environment."However, the company warned that exchange rates could cause a headwind of around 2% to profit for next year and may cause net debt to rise by £30m. BC