UK: GKN 2012 pretax profit up 19%

By Graeme Roberts | 26 February 2013

GKN has reported 2012 sales up 13% and pretax profit up 19%.
"2012 was another strong year for GKN with record profits in all four divisions. The group has continued to make good progress financially and in implementing our strategy to build a market-leading global business, with excellent technology, a focus on operational excellence and above-market growth," said CEO Nigel Stein in a statement.
The 19% rise in 2012 pretax profit, helped by demand for luxury cars from makers such as Jaguar Land Rover and Audi in China, beat analysts' forecasts, Reuters reported.
"I don't see the European small car market recovering this year, the best we can expect is flat sales," Stein told Reuters, adding that profits in the first half of this year would be hit by a GBP21m (US$32m) charge to help lower costs at its autos businesses.
"But the US and Asia should continue to grow and more than offset softness in Europe," he added.

Divisional highlights

Organic sales growth Trading margin
2012 2011 % 2012 2011
GKN Driveline 3,236 2,795 7 7.3 7.0
GKN Powder Metallurgy 874 845 7 10.0 8.5
GKN Aerospace(1) 1,584 1,481 8 11.2 11.2
GKN Land Systems 933 885 1 9.4 7.6
Group 6,904 6,112 6 8.5(2) 7.7

(1) GKN Aerospace excludes the fourth quarter contribution from Volvo Aero.
(2) 8.4% excluding Volvo Aero
The table does not include other businesses (cylinder Liners and Emitec). 

GKN Driveline 


GKN expects 2013 overall to be a year of good progress for the group.

In automotive, external forecasts suggest that global light vehicle production should grow around 2% with increases in Asia and North America but Europe down.

Against this background, GKN Driveline and GKN Powder Metallurgy are expected to show further improvement in 2013 overall. However, the first half results will be impacted by lower market demand in Europe and, recognising that the market is unlikely to recover for some time, actions are being taken to reduce the fixed cost base. Restructuring charges, primarily in the first quarter, are expected to be GBP16m in GKN Driveline and GBP5m in GKN Powder Metallurgy.

The performance of GKN Land Systems is expected to be broadly flat for 2013 as a whole, with the first few months more challenging due to weaker European industrial and passenger vehicle markets. European and North American agricultural equipment markets are expected to remain robust.

Overall, the group's broad exposure to global markets, strong customer positions and healthy order books mean that GKN should make good progress in 2013, benefiting from the full year contribution from Volvo Aero.