GKN has reported sales up 17% from £3,853 million to £4,518 million in its latest six months' report.
‘This is a good set of first half results with GKN continuing to make underlying progress in line with our expectations,’ said Nigel Stein, chief executive of GKN. ‘Each division has continued to deliver against our strategy. GKN is in good shape with excellent technology and strong positions in the aerospace and automotive markets. […] We expect 2016 to be another year of growth, helped by currency translation and Fokker. To increase momentum going into 2017, we will reduce our fixed costs by £30 million.’
GKN Powder Metallurgy, comprising Sinter Metals and Hoeganaes reported organic sales growth in line with the market, before the pass-through of lower raw material surcharges. The trading margin increased to 12.6% (2015: 11.8%), benefiting partly from the lower surcharges. A strong focus on technology and £120 million annualised new and replacement business was won, and Chinese powder production commenced.
GKN Aerospace reported an organic sales growth of 2%, comprising commercial (+8%) partially offset by a decline in military (-14%), while GKN Driveline reported organic sales growth of 5%, ahead of global auto production. GKN Land Systems’ organic sales were down 6% due to challenging agricultural and construction equipment markets and the ending of chassis contracts, the company said.
Continuing growth
‘Aerospace markets generally remain in transition as some aircraft programmes run down and others ramp up,’ GKN said in a press release. ‘The overall market in 2016 will be broadly flat, according to external forecasts. Against that backdrop, GKN Aerospace’s 2016 organic sales are expected to be slightly up on last year, and the results will benefit from the contribution of Fokker. In the medium term, our strong commercial order book supports continuing growth for GKN Aerospace.
‘In automotive, external forecasts predict growth in global light vehicle production of around 3% with increases in China, North America, Europe and India. Against this background, GKN Driveline and GKN Powder Metallurgy are expected to continue to grow organically above the market.
‘GKN Land Systems sales are expected to continue to decline due to softer agricultural and construction equipment markets, although the rate of decline is slowing.
‘GKN is sharpening its focus on costs and also directing capital expenditure more towards productivity. Fixed cost reductions of £30 million will benefit 2017. There will be a charge to achieve these savings of £35 million (included within management results) in the second half of 2016. This is in addition to the Fokker integration charge that was previously announced.
‘Despite market uncertainty following the EU Referendum, there should be little impact on GKN over the medium term and 2016 is expected to be another year of growth, helped by currency translation and Fokker.’
This story is reprinted from material from GKN, with editorial changes made by Materials Today. The views expressed in this article do not necessarily represent those of Elsevier.
