NEWS RELEASE
GKN plc
Trading update
22 October 2015
GKN plc, the global engineering business that serves the aerospace, automotive and land systems markets, today issues a trading update with organic sales growth of 2%, in line with expectations.
Group Results
Management sales for the nine months ended 30 September 2015 were £5,683 million (2014:
£5,617 million). This represented a 2% organic increase, with beneficial currency translation of £29 million being more than offset by the net negative impact of disposals/acquisitions of £54 million.
Group trading margin was slightly below last year principally due to GKN Land Systems including the previously announced restructuring costs.
Divisional Performance
GKN Aerospace
GKN Aerospace sales in the nine months were £1,756 million (2014: £1,642 million), slightly up on an organic basis. Commercial sales were helped by the ramp-up of new aircraft which more than offset lower A330 production. Military demand declined, as expected, with the ending of C17 production.
The mix of new and mature programmes led to lower margins than the same period last year.
GKN Aerospace continues to transition from older programmes to new platforms, which have significant GKN content and will provide future growth. In addition, the acquisition of Fokker
Technologies, which is expected to complete shortly, will further strengthen our technology, manufacturing footprint and bring additional content on key growth programmes.
GKN Driveline
GKN Driveline delivered a good result with sales in the nine months of £2,665 million (2014: £2,594 million). Organic sales increased 4% against global industry production rates that were up 1%.
Good organic growth was achieved in Europe where we continue to grow strongly above the market.
In the Americas and Asia, sales were up modestly. China production rates reduced in recent months in line with concerns over the economic outlook. Market forecasts for China now show no growth in the fourth quarter this year. We experienced weakness in the third quarter as there was a greater shift towards domestic brands, but with the help of new launches, we expect to outperform the market in the fourth quarter. Our weakest market is Brazil, where we are reducing costs.
GKN Driveline margins were similar to last year's equivalent period.
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GKN Powder Metallurgy
GKN Powder Metallurgy sales in the nine months were £694 million (2014: £696 million). Organic sales were flat, reflecting the negative impact on powder sales of a direct pass through of lower raw material prices and a slowing in European sales that are exported to China. GKN Powder
Metallurgy margins were slightly higher than those achieved over the comparable period last year.
GKN Land Systems
GKN Land Systems sales in the period declined to £535 million (2014: £602 million), including a 7% organic decline principally due to demand weakness for agricultural equipment. The previously announced restructuring programme has been implemented, the costs of which, along with reduced sales, has resulted in a lower margin.
Other businesses
Sales for GKN’s other businesses fell to £33 million (2014: £83 million) reflecting the disposal in
2014 of the Group’s share of the Emitec joint venture. Overall, these businesses reported a small loss reflecting the investment in GKN Hybrid Power.
Outlook
In line with the global economic outlook, we see a slight softening to the rate of growth in our major markets in the fourth quarter. The automotive market is forecast to see a 1% decline in the final quarter. Military aerospace and agricultural equipment markets look set to continue their declines whereas commercial aerospace markets remain robust. Notwithstanding the backdrop of the tougher economic environment, before any impact from the Fokker acquisition, the Group continues to expect 2015 overall to be a year of further growth.
Summary
Nigel Stein, Chief Executive, GKN plc, commented:
"We have maintained our progress reporting 2% organic growth, in spite of the tougher economic environment. We continue to expect 2015 to be a year of further growth."
Final Results Announcement
The Group will issue its 2015 full year results announcement on 23 February 2016.
Trading update call
There will be a call for analysts and investors at 08:30am today (22 October). Dial in details are:
Direct dial:
UK toll-free:
Conference ID:
+44 (0) 203 139 4830
0808 237 0030
37971741#
Participants dialling into the call from outside the UK can find a local number in the following file: http://wpc.1726.planetstream.net/001726/FEL_Events_International_Access_List.pdf
Conference ID as above.
A replay of the conference call will be available for 30 days at the following numbers or will be available thereafter on the Group’s website. Audio Playback:
Direct dial:
UK toll-free:
Conference ID:
+44 (0) 203 426 2807
0808 237 0026
663145#
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Notes
(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 joint ventures. 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.
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 51,000 employees in subsidiaries and joint ventures and had sales of £7.5 billion in the year ended 31 December 2014. GKN plc is listed on the London Stock Exchange (LSE: GKN).
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