Why Melrose Is Up 23% This Year

LONDON -- Melrose (LSE: MRO.L  ) has advanced 23% to 244 pence so far during 2012, making the share one of this year's best performers in the FTSE 100.

The company -- which buys underachieving manufacturing businesses, improves their fortunes, and then sells them on -- seems to have impressed investors with a series of very positive statements.

During March, Melrose published its annual results for the year to Dec. 31, 2011. Revenues were up 11% for the full year, including a 14% rise in the second half. Pre-tax profits gained an impressive 32%, at 161 million pounds, while the order intake advanced 22% to stand at 1,217 million pounds. Earnings per share were up 20%, at 28.8 pence, with an 18% increase to the full-year dividend.

During May, an interim management statement revealed revenues for the year to date were up 9%, with the total value of orders received up 3%. The directors said they were pleased with the start to 2012, and that trading was in line with their plans.

Then in August, Melrose issued half-year results that showed revenues for the period up 9% at 565 million pounds, headline pre-tax profits rising 16% to 82 million pounds, and headline earnings per share increasing 15% to 8.2 pence.

Christopher Miller, chairman of Melrose, commented at the time:

These are another set of excellent results emphasizing the quality of the Group and the continued success of our strategy to "buy, improve, sell." We have now successfully completed our next acquisition, Elster, and look forward to growing further shareholder value from our enlarged group for the benefit of our shareholders.

Economic conditions are difficult to predict at present but we are confident that our group companies place us in a good position to benefit from market opportunities.

Melrose's next trading update will be published on Nov. 16, and may reveal further encouraging news that can impress investors.

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