Noting that “production in Japan was severely impacted by the earthquake and tsunami and some disruption has also been experienced in Europe and North America as a result of component supply problems from Japan”, driveline specialist GKN nonetheless boosted forst quarter sales 16% and increased trading profit 35% despite an estimated tsunami/earthquake-related hit estimated at GBP3m.
First quarter sales were GBP673m versus GBP580m in Q1 2010 and trading profit of GBP50m compared with GBP37m. The ‘Driveline’ division’s trading margin was 7.4%.
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“Japanese OEMs are planning to resume volume production through April and May, although it will be some time before the industry is in a position to catch up on production lost through the first half,” GKN said in an interim trading statement.
“Global light vehicle production increased by around 4% in the first quarter to 19.4m vehicles with good growth in the European premium vehicle segment and the Indian, North American and Chinese markets.”
During March, the unit sold its 49% share of the Japanese driveshaft sales and distribution joint venture GTK to its JV partner JTEKT Corporation for JPY1.1bn (GBP8m) in cash.
“This action will reduce management sales by around GBP30m per year, with only a small impact on reported profit. Although slightly reducing driveshaft market share in the short term, the transaction will give Driveline freedom to compete independently in the Japanese market and build even stronger direct relationships with Japanese vehicle manufacturers,” GKN said.
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