British engineering firm and car parts maker GKN reportedly has met expectations with a 9% rise in first-half profits after higher aerospace sales offset rising raw material and energy costs.
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According to Reuters, GKN, which makes parts for cars and aircraft, also announced two acquisitions in the United States and flagged more purchases as it completes a two-year restructuring and expands in China and India.
Pre-tax profit excluding restructuring charges rose to GBP112m ($210m) from GBP103m a year earlier. Analysts were tipping earnings of GBP108m, according to the median of forecasts on Reuters Estimates.
GKN said soaring steel, copper and nickel prices hit costs and expects raw material costs in the second half to be GBP5m to 6m above the same period last year. Energy costs were expected to be GBP5m higher in the second half.
GKN said it had acquired Rockford Powertrain, which makes driveshafts for the construction industry, and aerospace firm Stellex Aerostructures – the two US acquisitions would jointly contribute $200m to 2007 revenues, it said, according to Reuters.
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By GlobalData“We have still got plenty of firepower to continue to develop the group. The real focus is on aerospace and also the driveline business,” chief executive Kevin Smith told Reuters during a conference call.
The news agency noted that GKN wants to expand in high-growth markets. Smith reportedly said it expected the number of its employees in China to grow from 2,000 to 6,000 in the next four to five years – its workforce in India was tipped to double in the next few years.
GKN makes about 20% of its sales from aerospace and 80% from automotive parts such as wheels but car production has been flat in North America and western Europe, Reuters added.
