GKN improves in ‘tough conditions’

Chief executive Sir Kevin Smith said GKN's resilience had been demonstrated by its performance and successes during the first half of 2008. "A 17% increase in revenues, a 5% improvement in profit before tax and an excellent increase in operating cash flow clearly show the strength of our global businesses, each of which continues to enjoy market leading positions in their sectors," he said. "Our Automotive businesses have shown resilience in tough market conditions and Aerospace and OffHighway have performed strongly," he went on. "We have also taken a number of actions to protect the performance of our business as automotive markets soften in the second half. "We have continued to win substantial new business which has further strengthened order books across Automotive, OffHighway and Aerospace. "Discussions with Airbus are close to a conclusion on the acquisition of the Filton site and the sourcing of a major A350 work package - completion of this transaction would be the next major step for Aerospace. "Our major businesses are in good shape to prosper in an uncertain economic environment and the resilience of GKN will support continued development and growth." Looking ahead,Sir Kevin said that in uncertain economic conditions, GKN expected that its global positioning, diversity of end markets and strong order books would support continued above market growth. Cost recovery measures and increased operational flexibility were anticipated to deliver improved performance in Driveline and Powder Metallurgy when compared with the first half, against a background of softening markets. Aerospace and OffHighway were expected to perform strongly. Raw material costs, particularly steel, remained high and volatile, GKN said. However, the Group had undertaken initiatives in the first half that would improve the level of cost recovery from customers. Conclusion of the negotiations for the acquisition of the Airbus Filton wing aerostructures site was imminent, GKN said, with completion expected before the end of the year.