The company report suggests that GKN’s automotive and powder metallurgy businesses will make strong progress in 2010, with an improvement in end market demand and sales growth. The group restructuring will also help improve trading margins from 2009 second half levels.
The results reported a decline in automotive, powder metallurgy and offhighway sales, with a strong performance in aerospace. Sales were down 3%, underlying sales down 22% (£1,134 million), and the group’s trading profit was £152 million, down £69 million. The trading margin recovered to 6.5% in the fourth quarter. Automotive (including powder metallurgy) sector reported £7 million trading profit, despite underlying sales down 25%, and in aerospace, sales were up 48% with a trading profit up 61% to £169 million.
In response to the global recession the group restructured the group to reduce the break-even points in by around 20% and re-positioned the aerospace business for lower aircraft production volumes in 2009. As a result, both automotive (including PM) and aerospace divisions were profitable in the fourth quarter, and the Group reported a trading margin of 6.5%.
The group’s original restructuring plan included reducing global headcount by around 5,260 people by July 2010, with 13 manufacturing sites to be closed. As markets weakened during the year, restructuring activities were extended, and around 3,500 employees left the group in 2009 and 13 facilities were affected by closure actions.
“Against a background of expected improvements in global economies, we expect the group to make significant progress in 2010,” the report said. “Our balance sheet strength and excellent market positions give the board confidence in a strong and sustained GKN recovery.”