Melrose Industries lifted by Auto and Powders but expects chip shortage impact

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Melrose Industries PLC (LON:MRO) said trading in 2021 so far has been slightly ahead of expectations but cautioned the global shortage of semiconductors will affect it later in the year.


Sales over the four months to 30 April rose by 8% compared with the same period in 2020 and were up by 4% excluding Nortek Air Management, which Melrose recently agreed to sell for US$3.6bn.


Margins and cash generation were also better than expected, said the statement, with the improvements expected to continue.


Aerospace sales were down by 27% though the division made a modest profit said Melrose, with civil activity reflecting the reduction in travel due to the Coronavirus pandemic. Military sales were up.


Automotive division sales rose by 28% as markets started to recover, but the company expects this will slow as the chip shortage starts to impact carmakers.


Powder Metallurgy had a strong quarter with sales up 35% and even improved slightly on 2019, while Noretex Air Management increased sales by 28% and 27% on 2020 and 2019 respectively.


Simon Peckham, chief executive, said: “We are pleased with our start to the year and hopefully will see this momentum continue for the rest of the year.


“We are encouraged by the significant improvements made to the GKN businesses being reflected in their financial performance.”

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