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London - British investment firm Melrose Industries said it would be difficult to achieve revenue growth this year because of the pound's strength and a slowdown in industries such as mining.
Melrose stock fell as much as 8.8 percent on Wednesday morning, making it the top percentage loser on FTSE-100 Index.
The company - which follows a private equity model of 'buy, improve and sell' - said that while the medium-term outlook was positive, weakness in some markets may limit short-term growth.
"Revenue (growth) is tough to achieve in all the end-markets," Finance Director Geoffrey Martin told Reuters.
"In particular we are cautious on mining, which is the worst end-market we have."
Martin said the only end-market showing growth was the gas meter business of the company's Elster division.
Elster Group, which Melrose bought in August 2012, generated two-thirds of the company's revenue of £1.73bn ($2.88bn) in 2013. The company also makes meters to measure water and power consumption.
Elster's operating profit increased 37% in the first full year of ownership, Melrose said.
Melrose, which gets about 90% of its revenue from outside of the UK, said it expected the strong pound to remain a problem in 2014.
"We see a forex headwind of about 5% in 2014, which is in line with what other engineering companies are saying," Martin said.
Revenue in the company's Brush division, a manufacturer of electricity generating equipment, fell 5.7% to £350.1m due to a drop in orders for turbogenerators.
The company's Bridon division, which supplies ropes used in mines, was experiencing lower demand as miners cut spending. Revenue fell marginally to £266.4m in 2013.
Investec analyst Michael Blogg cited the strong pound as a reason for cutting his profit forecast.
"This year appears more difficult (with some weak market niches and forex headwinds), although we continue to expect margin progress," Blogg said in a note to clients.
Melrose's headline pretax profit rose to £226.1m from £117.9m, reflecting the Elster acquisition. Revenue rose about 65%.
The company returned about 600 million pounds to shareholders on February 28. An 11-for-13 share consolidation also took effect on that date.
Melrose sold five companies in 2013, for a total of £950m. In the biggest deal, US lifting equipment makers Crosby Group and Acco Material Handling Solutions were sold to KKR & Co for £633m.
The company said it would pay an unchanged final dividend of 5 pence per share.
