First quarter flat for GKN as European woes hit exports
MIDLAND engineering group GKN has announced flat organic sales during the first quarter following a mixed performance in its main markets.
The Redditch-based group said that in the three months ended March 31, 2013 sales totalled £1,891m, a 9% increase over the comparable period in 2012 but flat on an organic basis. The increase in sales from acquisitions less divestments was £159m.
Trading profit reduced slightly to £139m and included a £23m charge for restructuring and a £19m contribution from acquisitions. Trading margin was 7.4%, or 8.6% excluding the restructuring charges. Pre-tax profit was £119m, a 4% reduction over the comparable period in 2012.
In a trading update, the group said: “Market conditions and the group’s performance in the first quarter have been consistent with expectations. Global light vehicle production was down c.1% with deep declines in Europe and Japan partly offset by strong growth in China and Brazil. Commercial aerospace improved while the weakness in construction and European industrial markets, evidenced during 2012, continued.”
In outlook, it said its markets remained in line with predictions in February and it continued to believe 2013 would be a year of progress.
Nigel Stein, Chief Executive, GKN, said: “We have met our expectations for the first quarter against the backdrop of challenging end markets. Last year’s acquisition, GKN Aerospace Engine Systems (formerly Volvo Aero), is performing well against our restructuring and integration plan and made a strong financial contribution. With restructuring charges now largely behind us, we expect the remainder of the year to show improvement, supported by our market leadership positions, advanced technology and extensive global footprint.”
The Birmingham-based Driveline operation was impacted by the situation in Europe, one of its largest export markets.
The group said global light vehicle production in the first quarter of 20.8m vehicles, was around 1% lower than the comparable period in 2012, with good growth in China (+10%) and Brazil (+11%) being offset by declines in Japan (-16%), Europe (-9%), India (-6%). North America increased 1%.
Sales for the division reached £844m for the quarter (2012 Q1: £847m) and trading profit fell away 20% from £64m in Q1 last year to £51m. Trading margin was down 1.6 percentage points at 6.0%.
