* Rev excl Elster up 6 pct from July 1 to Nov. 15 vs 10 pct
* Weekly rate of order intake 8 pct lower than H1
* Shares fall as much as 16 pct
By Brenton Cordeiro
LONDON, Nov 16 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.