The chairman of industrial group Melrose has painted a bright picture for the future after posting a 57 per cent rise in profits.
The Alcester-based firm revealed this week it made £60.4 million pre-tax profits for the six months to June 30, compared with £38.4 million in the same period last year.
Christopher Miller said the company was continuing to benefit from the 2008 takeover of FKI, one of Britain’s best-known engineering groups, which has delivered more than £500 million in headline operating cash to date.
He said that while the full impact of Government cost-cutting was still to come to the fore, the firm remained confident about future prospects.
Mr Miller said: “The recovery in sales and order books in the majority of our businesses, which have a wide geographical spread, has been established now for some months and has continued through the summer.
“Although it remains difficult to gauge the eventual impact of government debt reduction measures, particularly in Western economies, we are confident that our businesses will see further progress in the remainder of this year and into 2011.”
The rise in profitabilty for Melrose, which specialises in investing and improving engineering firms, came despite a fall in sales. In the first half of the year the firm turned over £675.7 million, compared to £684.7 million in the same period in 2009.
Operating margins rose from 10.2 per cent to 13.6 per cent in that time, and Mr Miller said expenditure “has been on a relatively tight rein for 18 months”.
Since flotation in 2003, it has been Melrose’s strategy to acquire businesses where it believes it can increase shareholder value.
Mr Miller said the board was still seeking acquisitions, with signs that the market for disposals is gradually returning. And he was pleased at the continued progress in returns from FKI, which makes hardware, specialist lifting equipment and conveyor systems, as well as die-casting firm Dynacast.
He added: “Given the continued improvement in the acquired FKI businesses and the strong recovery at Dynacast, the group has again substantially increased its profits, earnings per share and operating margins.
“Since the FKI acquisition the group has generated over £500 million in headline operating cash. We have exceeded our acquisition assumptions in difficult economic times and are well positioned for further improvements in performance.
Mr Miller said in geographical terms, demand has been stronger in South East Asia and Europe than in North America.