07 May 09. The global crisis in the automotive sector dragged down underlying sales at GKN by a third during its first quarter, investors in the car parts and aerospace company were told at its annual meeting on Thursday. But shares in the company closed flat at 139¼p after giving up early gains as investors took comfort from an uptick in March trading. GKN moved back into the black after a lossmaking start to the year as solid aerospace sales helped mitigate “extremely challenging” markets for private and commercial vehicles. Sir Kevin Smith, chief executive, said the start to the quarter had been marked by a destocking of components by light vehicle manufacturers, with a 20 per cent decline in sales resulting in a 35 per cent fall in production by its global bases of customers. The ripple effect of the collapse in demand had seen GKN’s automotive sales, measured at constant currencies, fall by 49 per cent over the first two months, though this fall in sales narrowed to 36 per cent in March. With inventories largely exhausted and signs of car sales volumes reaching their trough, GKN hoped that year-on-year falls in demand for its parts could start to narrow into the second quarter, Sir Kevin said. The company has also seen a fall in demand in its off-highway market – centred on vehicles used in agriculture and heavy industries such as mining – that was sharper than previously expected. Performance in the aerospace sector had continued in line with expectations, though GKN is expecting a downturn in civil aircraft manufacturing to hit trading from the end of the year. GKN Aerospace, which now includes a contribution from its UK Filton business acquired at the beginning of the year, made a trading profit of £46m in the quarter, compared with a trading loss of £47m in GKN’s global automotive business. (Source: FT.com)
BATTLESPACE Comment: Marcus Bryson and Frank Bamford gave a cautious but upbeat Statement about GKN Aerospace’s prospects for this year saying that they expect the A400M to progress albeit slower due to design changes, They had delivered 7 A400M wing spars. They also expect civil aircraft numbers to drop further this year. Turnover for the segment this year is expected to be £1.4bn and 3100m profit. GKN Aerospace has $2.5m per shipset on the Boeing 787 which is ramping up production and $3.5m per shipset on JSF which it hopes to expand and build on. GKN is celebrating its 250th birthday this year.
08 May 09. Shares of US defence companies fell on Thursday as the Obama administration unveiled a $534bn core defence budget for fiscal year 2010 that would ease spending on missile defence and scale back some programmes. Of the $17bn in budget savings the White House has identified, about half were in defence. Lawmakers will have the last say on spending. “The big concern out there is what all is going to get cut,” said Brian Ruttenbur, a defence analyst with Morgan Keegan. “It’s not so much about 2010; it’s about what [the Pentagon is] saying for 2012, ’13 and ’14.” The Standard & Poor’s Aerospace & Defense Index .GSPAERO was down 1.4% in the early afternoon. The 2010 defence budget seeks funding for weapons programmes such as Lockheed Martin’s advanced F-35 joint strike fighter plane. But it would scale back plans for initiatives such as a joint army-air force programme for new cargo airplanes that is run by L-3 Communications Holdings and Alenia, a unit of Italy’s Finmeccanica. In missile defence, funding for the Patriot PAC-3 missile programme involving Raytheon and Lockheed was slated to drop to $404.4m from $1.04bn a year earlier. The ground-based midcourse defence system (GMD) built by Boeing was also slated for cuts. “The budget request that was put out today does represent the changes that Secretary Gates announced on 6 April,” said Todd Harrison, a fellow for defence budget studies at the Center for Strategic and Budgetary Assessments. “The winners in this budget are special operations fo