Melrose order cancellations surge as automakers battle chip shortage By Reuters


© Reuters. FILE PHOTO: A researcher plants a semiconductor on an interface board during a research work to design and develop a semiconductor product at Tsinghua Unigroup research centre in Beijing, China, February 29, 2016. REUTERS/Kim Kyung-Hoon/File Photo

(Reuters) -British parts supplier Melrose’s automotive clients are cancelling orders at 25 times the rate seen earlier this year, it said on Tuesday, as the auto industry remains engulfed in a global chip shortage caused by the pandemic.

The owner of GKN (LON:), which supplies parts to carmakers such as Volkswagen (DE:), said the “in-month” cancellation from automotive customers has risen to about 20% to 25% from a normal 1% rate seen during the January-March period.

“Tightened supply of semiconductors to the automotive industry are frustrating and difficult to plan for, but whilst they affect current trading, they don’t impact long-term value, particularly as cash is well controlled and debt reduced,” Chief Executive Simon Peckham said.

The company said it was focussed on recovering costs in the backdrop of rising inflation and that all its businesses would take “whatever actions are necessary to do so”.

Melrose, however, said its aerospace division had shown improvement, with revenue in the third-quarter rising 16%.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.