UPDATE 2-Melrose says Elster margins grow faster than expected
* Full-year pretax profit rises 38 pct 214.3 million stg
* Elster operating margin up 1.9 percentage points at 14.1 pct
* Shares rise as much as 7 pct (Adds analyst comment, details on Elster; updates share move)
By Karen Rebelo
March 6 (Reuters) - Engineering turnaround specialist Melrose Plc reported a 38 percent rise in full-year pretax profit and said margins at recently acquired Elster Group improved faster than expected.
Melrose shares rose as much as 7 percent on the London Stock Exchange, making the stock one of the top gainers among FTSE 100 companies.
Investors focused on Elster, Oriel Securtities analyst Harry Phillips told Reuters.
"... They are getting the cost out faster than anticipated and therefore the Elster margin will improve more quickly than we thought".
Operating margin grew by 1.9 percentage points to 14.1 percent at Elster, which makes meters for the energy industry.
Melrose, which follows a private equity-type model of investing in companies to improve their performance and then sell them, acquired Germany-based Elster for $2.3 billion in June in its first major deal in four years.
Melrose owns companies that cater to the energy, oil and gas and mining industries, as well as the housing, construction and automotive sectors.
Pretax profit rose to 214.3 million pounds ($324.0 million) in 2012 from 154.7 million pounds a year earlier. Revenue increased 43 percent to 1.55 billion pounds.
Revenue rose 7 percent, excluding the acquisition of Elster.
Analysts on average had expected a pretax profit of 202.1 million pounds and revenue of 1.53 billion pounds according to Thomson Reuters I/B/E/S.
Melrose' shares were up 5 percent at 272.96 pence at 1017 GMT on the London Stock Exchange. They touched a year-high of 278.85 pence earlier. ($1 = 0.66 British pounds) (Reporting by Karen Rebelo in Bangalore; Editing by Joyjeet Das)