NEWS RELEASE
GKN plc
Trading update
20 April 2016
GKN plc, the global engineering business that serves the aerospace, automotive and land systems
markets, today issues a trading update for the period ended 31 March 2016.
Group Results
The Group’s principal markets have performed in line with the expectations set out in our February
results announcement. Management sales for the three months ended 31 March 2016 were
£2,179 million (2015: £1,943 million). This 12% increase comprised 1% organic growth, 8%
acquisition growth and 3% beneficial currency translation. Our Automotive businesses continue to
outperform the market and our Aerospace business has traded in line with our expectations,
against a strong comparative period. Land Systems’ markets remain tough.
Group trading margin is lower than last year primarily due to a reduction in GKN Aerospace as a
result of lower military sales, the mix of new and mature programmes and the absence of last
year’s one-off benefits. The inclusion of Fokker Technologies (“GKN Aerospace Fokker”) increased
profit but reduced trading margin.
Operating cash flow was similar to the equivalent period last year.
Divisional Performance
GKN Aerospace
GKN Aerospace sales in the first quarter of £767 million (2015: £589 million) were in line with our
expectations, being flat on an organic basis against a strong comparator period in the prior year.
In commercial aerospace, the planned production ramp-up of new aircraft is more than offsetting
cuts in the A330 programme. Military sales were lower than the prior year, reflecting the continuing
decline of mature programmes, mainly the F/A-18 Super Hornet and UH-60 Black Hawk helicopter.
GKN Aerospace Fokker, acquired on 28 October 2015, added £159 million of sales. Our
integration plans are progressing well and overall Fokker performed in line with expectations.
GKN Aerospace continues to transition to new platforms, which have significant GKN content and
will provide future growth.
GKN Driveline
GKN Driveline delivered a good first quarter result with sales increasing 7% to £976 million (2015:
£912 million). Organic sales increased 4% against global industry production rates that were up
1% in the quarter. External forecasts continue to expect full year global auto production to increase
by 3%.
Strong organic growth above the market was achieved in Europe due to new programme launches
and the continued strength of premium vehicles. In the Americas, GKN Driveline performed above
the market in South America, benefiting from the export of parts to other areas, whereas in North
America, the mix of vehicle sales towards light trucks hindered its relative performance. Within
Asia, sales growth in China was below the market due to the continuing shift towards domestic
brands and smaller vehicles, whereas GKN Driveline Thailand achieved strong growth due to sales
of all-wheel drive components.
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GKN Powder Metallurgy
GKN Powder Metallurgy sales were £246 million (2015: £244 million). Organic sales were 2%
lower due to the direct pass through of lower raw material prices which also had the effect of
improving margins slightly. Excluding the raw material impact, sales growth was above the market,
led by Asia.
GKN Land Systems
GKN Land Systems sales declined to £181 million (2015: £187 million). Organic sales declined 6%
due to continued demand weakness for agricultural equipment and the ending of a chassis
contract, partly offset by a 3% benefit from currency translation. The Agricultural market,
particularly in North America, remains soft.
Summary
Nigel Stein, Chief Executive, GKN plc, commented:
"Our overall performance in the first quarter was in line with our expectations. With end markets
delivering as forecast and customers continuing to award us good levels of new and repeat
business, we expect to grow in 2016 and beyond, helped by the contribution from Fokker, whose
performance and integration is on track."
Half year results announcement
The first half results will be announced on 26 July 2016.
Trading update call
There will be a call for analysts and investors at 08:30am today (20 April). Dial in details are:
Direct dial:
UK toll-free:
Conference ID:
+44 (0) 203 139 4830
0808 237 0030
67035515#
Participants dialling into the call from outside the UK can find a local number in the following file:
http://events.arkadin.com/ev/docs/NE_FEL_Events_International_Access_List.pdf
Conference ID as above.
A replay of the conference call will be available on the Group’s website:
http://www.gkn.com/investorrelations/Pages/results-and-presentations.aspx
Note
(1)
Financial information set out in this announcement, unless otherwise stated, is presented
on a management basis which aggregates the sales and trading profit of subsidiaries
(excluding certain subsidiary businesses sold and closed) with the Group’s share of the
sales and trading profit of equity accounted investments. References to trading margins are
to trading profit expressed as a percentage of sales. Where appropriate, reference is made
to organic results which exclude the impact of acquisitions/ divestments as well as currency
translation on the results of overseas operations.
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Further information:
Analysts/Investors:
Guy Stainer
Investor Relations Director
GKN plc
T: +44 (0)207 463 2382
M: +44 (0)7739 778187
E: guy.stainer@gkn.com
Media:
Chris Fox
Group Communications Director
GKN plc
T: +44 (0)1527 533238
M: +44 (0)7920 540051
E: chris.fox@gkn.com
Cautionary Statement
This announcement contains forward looking statements which are made in good faith based on
the information available at the time of its approval. It is believed that the expectations reflected in
these statements are reasonable but they may be affected by a number of risks and uncertainties
that are inherent in any forward looking statement which could cause actual results to differ
materially from those currently anticipated. Nothing in this document should be regarded as a
profits forecast.
Notes to Editors
GKN plc is a global engineering business serving the aerospace, automotive and land systems
markets. It has operations in more than 30 countries, around 56,000 employees in subsidiaries and
equity accounted investments and had sales of £7.7 billion in the year ended 31 December 2015.
GKN plc is listed on the London Stock Exchange (LSE: GKN).
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