- U.S. celebrity chef explains use of racial epithet in deposition
- Warburton leads eight Welsh Lions in first test
- Actor James Gandolfini, star of 'The Sopranos,' dies in Italy
- British Supreme Court ruling threatens Western sanctions against Iran
- Italian designers Dolce and Gabbana convicted of tax evasion
UPDATE 2-UK's Melrose says order delays make 2013 outlook uncertain
* Rev excl Elster up 6 pct from July 1 to Nov. 15 vs 10 pct in H1
* Weekly rate of order intake 8 pct lower than H1
* Shares fall as much as 16 pct
By Brenton Cordeiro
LONDON, Nov 16 (Reuters) - British engineering group Melrose Plc warned of a slowdown particularly in the energy businesses which account for about half its operating profit, sending its shares down as much as 16 percent to a 10-month low.
"Growth in energy will be more modest next year, so I think that will be the division that we're most cautionary on," Finance Director Geoffrey Martin told Reuters.
The company, which follows a private equity-type model of investing in companies with the aim of improving their performance and selling them on, also noted that prospects for German meter maker Elster - acquired earlier this year for $2.3 billion - had been affected by lower-than-expected demand.
Overall Melrose said the outlook for next year was unclear. "Trading is in line with expectations for 2012, although revenue trends have slowed and recently the sales outlook for 2013 has become more uncertain," it said in a statement.
Melrose said its overall weekly rate of order intake in the period from July 1 to Nov. 15 was 8 percent lower than the first half, excluding results from Elster.
"The only clarity is that there is not any," Investec Securities analyst Chris Dyett said in a note. "We now forecast only modest underlying revenue growth in 2013, whilst expecting margins to be maintained, which might prove overly conservative in time, but feels sensible for now."
Revenue, excluding Elster, grew 6 percent at constant currencies in the period through Nov. 15, compared with 10 percent in the first half.
"We're not talking about revenue decline, we're not talking about things going backwards, just more modest growth going into next year," Martin said.
The finance director said demand for the smart meters made by Elster - which a European Union regulation requires to be supplied to 80 percent of consumers by 2020 - had been put off rather than cancelled.
"The thought was that they would start sometime next year ... (but) the thought now is that is delayed a bit beyond 2013," Martin said. "So it hasn't gone away, its not going to other people, its not that we're missing out."
Melrose owns businesses that cater to the energy, oil and gas and mining industries, as well as manufacturing firms that serve the housing, construction and automotive sectors. In June it bought Elster Group in its first major deal in four years.
"We have already made significant changes to Elster, and identified larger than expected cost savings," Melrose said in a statement, adding that a restructuring announced by Elster at the beginning of the year was on track.
Melrose shares were down 14 percent at 203 pence by 1018 GMT, having fallen as low as 198.2p, their lowest since January.
- Tweet this
- Share this
- Digg this