Overall demand in GKN's major markets has been better than anticipated in mid-October, GKN said in a trading update ahead of its 31 December full year results.

"In automotive, government incentive programmes continue to provide some support for sales of smaller light vehicles and improved production demand. Production of mid-sized vehicles, where GKN has greater exposure, has also increased in a number of markets as sales have shown some signs of recovery and inventory levels stabilised. As a consequence, demand has continued at similar levels to September and GKN's fourth quarter sales are now expected to show a good improvement compared with the third quarter," the supplier said.

The cash cost of the company's restructuring plan in 2009/10 is expected to increase from GBP103m to between GBP125m and GBP130m "with a commensurate increase in annualised benefits".

Management profit before tax for the year ending 31 December 2009 is expected to be in the range GBP70m-GBP80m, including an additional GBP7m finance charge from a bond repurchase. The group said it expects to make "further significant progress" in 2010.