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Melrose reports significant progress with GKN reorganisation

Melrose gave no details of plans to break up GKN following reports that it was looking to auction off the power metallurgy division
Melrose's hostile bid to buy GKN became unconditional in April

Melrose Industries PLC (LON:MRO) has reported “significant progress” with the revamp of GKN since its hostile takeover of the engineer in April.

In its results for the first six months of the year, the turnaround specialist said it has reduced central functions and agreed strategic plans to improve GKN’s businesses, which include aerospace, automotive and power metallurgy divisions.

READ: Melrose reportedly already looking to break up GKN with £2bn sale of Powder Met division

"Melrose is delighted with the acquisition of GKN, which has the significant potential for improvement which we identified when we made our offer," said chairman Christopher Miller.

"Plans have been agreed and are now being implemented to realise the full potential of GKN's world leading, but currently underdeveloped, businesses."

However, Melrose gave no details of plans to break up GKN. Melrose is reportedly looking to auction off GKN’s power metallurgy division this month and weighing options for its off-highway powertrain unit and wheels business.

The group reported statutory revenue of £2.9bn for the first half, up from £1.1bn last year, but swung to a statutory pre-tax loss of £303mln from a pre-tax profit of £47.8mln due to costs related to the GKN acquisition.

On a proforma basis, which includes GKN results, revenue came to £6.2bn and pre-tax profit came to £307mln.

Melrose declared an interim dividend of 1.55p per share, up 11% on last year.

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