NEWS RELEASE
GKN plc
Trading update
6 May 2015
GKN plc, the global engineering business that serves the aerospace, automotive and land systems
markets, today issues a trading update for the period since 1 January up until 5 May 2015.
Group Results
The Group’s principal markets have performed in line with the expectations set out in our February
results announcement. Our Automotive businesses continue to outperform the market and our
Aerospace business has traded in line with our expectations. Land Systems’ principal market
remains tough.
Management sales for the three months ended 31 March 2015 were £1,943 million (2014: £1,915
million). This represented a 1% organic increase, with beneficial currency translation being
broadly offset by disposals.
The strengthening of the US$ versus £ sterling has had a positive impact on these results,
especially in Aerospace but the weakening of the Euro has had a negative impact, particularly in
Driveline and Land Systems.
Group trading margin is slightly ahead of last year benefitting from currency, in spite of a decline in
Land Systems.
Operating cash generation is lower than the equivalent period last year because of the timing of
investment programmes to support growth.
Divisional Performance
GKN Aerospace
GKN Aerospace sales in the first quarter of £589 million (2014: £546 million) were in line with
expectations being slightly up on an organic basis. The planned ramp-up of production of new
aircraft is helping commercial sales while military demand is marginally down. Recently
announced cuts in production rates of the A330 will be a headwind in the second half of the year.
Margins are ahead of the same period last year.
GKN Driveline
GKN Driveline delivered a good first quarter result with sales increasing 3% to £912 million (2014:
£885 million). Organic sales increased 4%, against a very strong comparator period in 2014 and
global industry production rates only 1% higher over the period. Good organic growth was
achieved in Europe and China while Brazil and Japan were weak. Our North American sales were
flat due to the greater weighting towards cars/SUVs and the lower content in the pick-up truck
segment, which has been strong. GKN Driveline margins were similar to last year's equivalent
period although pricing remains a downward pressure.
GKN Powder Metallurgy
GKN Powder Metallurgy produced a strong first quarter, with sales up to £244 million (2014: £237
million). Organic sales growth was 3%, despite the negative impact on powder sales of a direct
pass through of lower raw material prices. Powder Metallurgy margins were a little higher than
those achieved over the comparable period last year. During the period, operations in Argentina
were sold.
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GKN Land Systems
GKN Land Systems sales declined to £187 million (2014: £217 million) including a 10% organic
decline due to continued demand weakness for agricultural equipment and a 4% fall due to
adverse currency translation. The Agricultural market, particularly in North America, remains soft
and we do not anticipate any improvement in this market in 2015. We are mid-way through the
previously announced restructuring programme.
Other businesses
Sales in the quarter for GKN’s other businesses fell to £11 million (2014: £30 million) reflecting the
disposal in 2014 of the Group’s share of the Emitec joint venture.
Summary
Nigel Stein, Chief Executive, GKN plc, commented:
"Our organic performance overall in the first quarter was in line with our expectations, with growth
above our markets in GKN Driveline and GKN Powder Metallurgy, slight growth in GKN
Aerospace, while GKN Land Systems was weaker. Looking ahead, we continue to expect 2015 to
be another year of growth."
Half year results announcement
The first half results will be announced on 28 July 2015.
Trading update call
There will be a call for analysts and investors at 08:30am today (6 May). Dial in details are:
Direct dial:
+44 (0) 203 139 4830
UK toll-free:
0808 237 0030
Conference ID:
86868160#
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
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):
Direct dial:
+44 (0) 203 426 2807
UK toll-free:
0808 237 0026
Conference ID:
656973#
Analyst Dinner
We will hold an informal dinner this evening with sell side analysts with a focus on GKN Powder
Metallurgy. No further trading update will be given. Presentation materials will be available
afterwards from www.gkn.com.
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Notes
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. These figures better reflect performance of continuing businesses. 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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