Melrose (260p and 4.5% of JIC) Results for the year ended 31st December 2012 published this morning are encouraging. The "buy, improve and sell" specialist says that it is a year ahead of schedule with its turn round of Elster. It must have hit the ground running , as it only acquired Elster last August. Elster operating margins are up 1.9% to 14.%5 and operating profits were up 11%.
Overall Melrose recorded revenue of £1.55bn and pre tax profits of £214.3m compared to £154.7m in 2011. Melrose businesses excluding Elster increased revenue by 7% and operating profit by 9% at constant currency. Earnings per share were slightly ahead of expectations at 16.1p compared to 15.8p in the prior year. The full year dividend has been increased by 2.7% to 7.6p per share.
Christopher Miller , Chairman said "We are very pleased with Elster and are already one year ahead of our improvement plan, increasing margins faster than expected. Existing Melrose businesses have performed well and Elster is proving to be another great opportunity to create more value for Melrose shareholders."
Conclusion: The outlook statement is encouraging and the Company is upbeat about the prospects for Elster. On 15.2x 2013 consensus forecasts for 8.2% growth and 13.3x Dec 2014 earnings for 14% growth this is in my view attractive. The management team have created enormous shareholder value over the years and I expect will do so again with Elster and the other business within the Group. Happy holder!
