Melrose has warned of significant job losses at its GKN Aerospace division as the turnaround investor swung deeper into the red in the first half.
The FTSE 100 firm – which bought defence business GKN two years ago after a major takeover battle – said sales in aerospace fell 18pc during the period.
As a result, the company has started a consultation process with some of its 53,000 employees and said that "regrettably a significant reduction in the worldwide workforce is inevitable" in the second half of the year.
Chief executive Simon Peckham, who shared a four-man £170m bonus windfall in 2018, refused to be drawn on how many positions would be cut, saying "it's not my job to worry our employees".
He added that there would be "relatively few" cuts to its UK workforce and most will be voluntary redundancies.
The restructuring of the business is expected to produce savings of £100m in 2021. In July, the company warned of impending job losses after suffering a severe blow during lockdown.
It came as Melrose plunged to a £685m statutory pre-tax loss, down from a £109m loss for the same period last year. Revenue also declined by more than a quarter to £4.1bn.
However, the firm was upbeat about its outlook, adding that recent trading was at the higher end of expectations.
Mr Peckham said the firm's automotive businesses had "had good summers" and trading is recovering but is not yet back to normal levels.
Alongside its automotive division, the ventilation and air-conditioning business Nortek also drove the recent robust performance.
However, the company said it would "review the strategic future" of Nortek in the early part of next year. Plans to sell Nortek were announced in March but were quickly put on hold as the pandemic hit.
Melrose bills itself as a listed private equity fund that buys ailing industrial businesses, improves them and sells them on, but has been dubbed a corporate vulture by critics.
Mr Peckham said the firm would be looking for further acquisition opportunities in 2021 and beyond, particularly in the aerospace and automotive industries.
Harry Philips, an analyst at Peel Hunt, said the results were "a little better than expected".
Melrose said it would be "inappropriate" to pay an interim dividend for 2020, adding: "We trust that shareholders will appreciate the importance of retaining cash within the group to ensure net debt is kept under control whilst also funding the necessary restructuring of the group to position it for the future."
Shares climbed 14.6pc to 115.2p in afternoon trading.