MELROSE INDUSTRIES PLC

Description

Melrose Industries PLC is a London-based manufacturing company that specialises in buying and improving underperforming businesses. It was established in 2003 by Christopher Miller, David Roper, and Simon Peckham. The company acquires manufacturing and industrial businesses having a strong fundamental background and works towards improving its performance. The company’s basic strategy is: Buy, Improve and Sell, and providing shareholders with superior benefits and return on their investments. The company finances its acquisition mostly from equity and does not depend on debts.

Melrose encourages and implements sustainable business practices, invests in R&D, focuses on profitability, sustainability, and operating cash generation, improves product and customer relationship to improve the performance of acquired businesses. Then the company sells the business at the right time and return value to its shareholders.

Melrose mainly operates in aerospace, automotive, powder metallurgy, Nortex air management segments. The GKN aerospace business manufactures airframe, engine structures and electrical interconnection system for mainly civil airframes, defence. This constitutes 30% of Melrose business. It operates in 14 countries, of which 66% revenue comes from the North America, Europe 29%, Asia 4%, and rest 1%.

The GKN Automotive operates in 20 countries and contributes 41% of Melrose business and supplies driveline technologies to around 90% of the world’s car manufacturers from the low-cost cars to premium cars. Around 50% of the cars sold in the world use GKN Automotive products. The Automotive division has two segments: Diverline and ePowertrain.  Of the total revenue in 2020, Driveline contributed 71%, All-Wheel drive 25%, edrive 3% and cylinder lines 1%. The major contributor to the revenue of GKN Automotive in 2020 was Europe with 35%, followed by North America with 33%, Asia with 28% and rest of the world 4%.

Power Metallurgy contributes 10% of Melrose business, and has 3 divisions: Sinter Metals, Hoeeganaes and additive. Operates in North America, Europe, and Asia. Nortek Air Management contributes 13% of Melrose business having 2 divisions: Nortek Global HVAC and Air Quality and Home Solutions. The other industrial segment contributes 6% to Melrose business and its division includes Brush, Ergotron, and Nortek control.