31 Jul 12. GKN plc Results Announcement for the six months ended 30 June 2012. Group results reflect the continued strong organic growth in all four Divisions and the contribution from acquisitions: Sales up 16% (£471m) to £3,459m, +8% on an organic basis; Excluding the 2011 effects of the Gallatin incident: Management trading (operating) profit up 19% to £293m; Trading margin improved to 8.5%; Profit before tax increased 19% to £266m; Earnings per share up 22% to 14.4 pence per share; Return on average invested capital reduced to 17.2% (2011: 18.1%), reflecting the 2011 acquisitions. Reported profit before tax of £289m (2011: £202m). Positive free cash flow of £28m (2011: £25m). Net debt of £590m (31 December 2011: £538m).
“GKN has continued to make good progress both in terms of financial performance and implementing our strategy to build a global market-leading business. First half trading has seen sales increases and margin progression for each of our four Divisions and our new acquisitions, Stromag and Getrag Driveline Products, are performing well. As a result of the strong performance and confidence in the future, the Board has decided to increase the interim dividend by 20% to 2.4 pence per share. The macroeconomic environment continues to be uncertain, with increasing headwinds in European auto markets. However, with the benefit of a good first half and the Group’s broad exposure to global markets, our expectations for 2012 remain unchanged. We expect 2012 to be another good year of progress for GKN and, in addition, we look forward to welcoming our new acquisition, Volvo Aero, into GKN when the transaction completes in the next few months.” Nigel Stein, Chief Executive, GKN plc
Divisional highlights
GKN Driveline
Getrag Driveline Products acquisition integrated and delivering ahead of expectations. Good progress made in all-wheel drive (AWD) systems, particularly with electronic differential lockers (EDLs).
GKN Powder Metallurgy
Continued strong product development and £80m of new business awarded. Trading margin improved 110bps, to 10.1%.
GKN Aerospace
New facility to open in Mexico to manufacture composite structural components for Blackhawk helicopters. New work packages won on Boeing 787, 525 Bell helicopter, Bombardier business jets and others.
GKN Land Systems
Stromag acquisition integrated and performing well. Now leveraging its customers and sales network to offer enhanced customer solutions from the Division’s combined technologies. Trading margin improved 140bps, to 10.2%.
Although the macroeconomic environment remains uncertain, the Group’s broad exposure to global markets and strong customer positions mean that GKN should make good progress in 2012, helped by the full year contribution from the acquisitions in 2011 of Getrag Driveline Products and Stromag. In automotive, external forecasts suggest that global light vehicle production in the second half will be lower than the first half, but should reach approximately 81m vehicles for the whole of 2012, an increase of nearly 5%. The strongest annual growth is expected in Japan and North America with a decline in Europe. Against this background, GKN Driveline is expected to show good year-on-year improvement, although the rate of growth will slow slightly due to stronger second half 2011 comparators as the effects of the Japanese tsunami unwind. GKN Powder Metallurgy expects sales to be lower than the first half reflecting normal seasonality and weaker European markets. In aerospace, civil aircraft production is expected to continue to grow, as both Airbus and Boeing increase production. This should more than offset the effects of lower production of US military aircraft. The performance of GKN Land Systems should continue to show an improvement, benefiting from the expected on-going strength in European and North American agricultural equipment markets partially offset by weaker European industrial markets. Sales in the second half are exp