Strong recovery from GKN

Chief executive Sir Kevin Smith (pictured) commented: "GKN's recovery has moved into another gear and we are continuing to build on our global market-leading businesses. The first half trading environment has seen an improving trend for GKN's Driveline, Powder Metallurgy and Land Systems businesses whilst the Aerospace market has continued to hold up well." The benefits of restructuring had enabled the group to improve margins and a continued focus on cash generation had reduced the company's debts. "Although macro-economic uncertainties continue, we remain confident that our strong market positions and sector leading technologies will enable us to take full advantage of growth opportunities as markets continue to recover," Smith concluded. In the six months to 30 June, sales were up 25% to £2,701 million, delivering a trading profit of £202 million, up £177 million GKN said the outlook for its major markets was mainly positive although some uncertainty remained, particularly around macro-economic conditions. In automotive, following a strong second quarter, external forecasts for global production in 2010 had increased from 68 million vehicles to around 71 million vehicles. With the ending of a number of government incentive schemes, particularly in Western Europe, and a return to normal seasonal patterns of demand, second half global production is forecast to be around 7% lower than the first half, but remaining slightly ahead of the second half of 2009. In aerospace, the US defence market was expected to remain solid, although the F-22 has started its production rundown. Civil aircraft production was likely to be stable throughout the balance of 2010, with customers increasing some production schedules in 2011. The Airbus A400M, Boeing 787 and 747-8 and the Joint Strike Fighter were all now moving into their production phase. The markets for Land Systems were improving, particularly for heavy construction and mining equipment globally and agricultural equipment in North America, although demand for agricultural equipment in Europe remains soft. Against this background, Driveline and Powder Metallurgy were expected to show strong growth in the third quarter, benefiting from recent market share gains and positions in the European premium car segment. For the second half as a whole a small reduction in sales was expected for both these businesses when compared with the first half reflecting more normal seasonal demand patterns. Ongoing restructuring actions in Driveline will complete around the end of the year, providing additional benefits to operating performance. Aerospace sales are anticipated to remain similar to first half levels with increased revenue from civil aircraft programmes offsetting the continuing rundown of the F-22 military aircraft. Land Systems should continue its improving trend although sales in the second half are expected to show a small reduction when compared with the first half, as normal seasonal patterns return.