GKN is ‘well positioned’ for recovery

The group reports significant progress in realigning its operations to weaker markets – a restructuring programme has been accelerated and will result in 3,600 fewer employees by next year. Its Automotive division (including Powder Metallurgy) has returned to profitability and Aerospace continues to perform strongly, while more stability in the Off-Highway division (parts for agricultural machinery) is expected in the fourth quarter. Sir Kevin Smith (pictured), chief executive of GKN, says: "The first half trading environment has been very challenging for GKN as the global recession impacted our businesses, initially Automotive and Powder Metallurgy and more recently in OffHighway. In response, we have aggressively cut costs, with a further 2,500 people leaving the Group in the first half of 2009, and conserved cash, by reducing capital expenditure and working capital. Towards the end of the period, as production schedules stabilised and with the benefits of the restructuring, Automotive (including Powder Metallurgy) returned to profitability. In Aerospace, we have achieved another set of strong results, with the Filton acquisition performing ahead of expectations. In OffHighway, underlying sales deteriorated throughout the period and were more than 50% down in June compared with June 2008." He added: "We continue to pursue opportunities to develop our strong market positions and, with continuing benefits from restructuring, we are well positioned to take full advantage as markets recover." Looking ahead, in Automotive and Powder Metallurgy businesses, GKN expects demand in the third quarter to remain at similar levels to the second quarter due to a quiet August, though improvements in September will carry through to the fourth quarter. Aerospace sales are expected to remain strong in the second half, with any further weakening in large commercial aircraft production schedules now unlikely before 2010. Off-Highway sales are expected to remain more than 50% lower in the third quarter – but the company says a more stable operating environment is expected in the fourth quarter, with some recovery in demand.