Aerospace growth helps fuel sales and profit rise for GKN
MIDLAND-based engineering group GKN has said it expects a strong second half fuelled by a buoyant aerospace sector.
The Redditch group said the global automotive market while struggling in Europe and characterised by weakening demand in India and Japan was expected to benefit from continuing growth in China.
Announcing a 12% increase in first half sales of £3,869m (2012: £3,459m), the group said that in aerospace, commercial aircraft production was expected to continue to grow, as both Airbus and Boeing increase production, although military demand was expected to decline.
Excluding Engine Systems, GKN Aerospace’s 2013 sales are expected to be similar to last year, reflecting increased commercial aircraft sales, lower military sales and the impact of the transfer of a supply chain contract to Airbus. For the division as a whole, it said second half profit was expected to benefit from both the ramp up of new programmes and the synergy benefits from GKN Aerospace Engine Systems.
In automotive, it said external forecasts suggested that global light vehicle production in the second half would be lower than the first half, but ahead of the equivalent period last year, reaching approximately 83m vehicles for the whole of 2013, an increase of 2%.
Against this background, GKN Driveline and GKN Powder Metallurgy are expected to show good year-on-year sales improvement, although reflecting normal seasonality. Second half profit in both divisions are expected to benefit from the absence of restructuring charges.
Due to weaker than anticipated industrial and construction markets and the planned cessation of certain chassis programmes, the Land Systems division is now expecting slightly lower sales in 2013 compared with 2012. The group said sales in the second half were expected to show a reduction when compared with the first half, due to normal seasonal patterns.
“Overall, with a stronger second half profit performance anticipated, GKN expects 2013 to be a year of good progress for the Group, helped by the contribution from GKN Aerospace Engine Systems,” it said in its interims statement.
Operating profit increased £29m to £320m (2012: £291m), with pre-tax profit rising 5% to £278m. Earnings per share declined 3% to 13.8p (2012: 14.3p), however, the interim dividend rose 8% to 2.6p per share (2012: 2.4p).
Nigel Stein, GKN chief executive, said: “GKN has continued to make good progress against our strategy to grow a market-leading global engineering business. Although some of our end markets remained challenging, we continued to outperform and are reporting good underlying financial results with further benefit from last year’s acquisition, GKN Aerospace Engine Systems (formerly Volvo Aero), which is performing well. The first half met our expectations and, with planned restructuring costs now behind us, we expect a stronger second half performance and to deliver good progress in 2013.”
