GKN: ‘Restructured and resilient’

GKN said sales were up 17% at £2.4 billion while pre-tax profits were 5% ahead at £131 million. Chief executive Sir Kevin Smith (pictured) said GKN’s resilience had been demonstrated by the performance and successes of the first half of 2008. He went on: “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. Our Automotive businesses have shown resilience in tough market conditions and Aerospace and OffHighway have performed strongly. 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, GKN said that in uncertain economic conditions, it expected that its global positioning, diversity of end markets and strong order books will 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 are expected to perform strongly. In more detail, Automotive markets were likely to soften further, with the Americas continuing their first half trend, Europe set to weaken and a potential slowdown in growth in Asia. GKN now expects second half light vehicle production in its major markets to show a small reduction against last year, leaving the year as a whole slightly ahead. Global OffHighway markets for agricultural and mining and heavy construction equipment remained strong. In Aerospace, the US defence market continued to support a healthy procurement programme, the group said. Civil aerospace growth looked set to soften, although this was unlikely to have much impact in the second half. Raw material costs, particularly steel, remained high and volatile. However, GKN had undertaken initiatives in the first half that would improve the level of cost recovery from its customers. All in all, GKN anticipates that second half performance will benefit from actions taken in the first half and that progress for the year as a whole will be in line with expectations.