NEWS RELEASE
GKN plc
Interim Management Statement
18 April 2013
GKN plc, the global engineering business that serves the automotive, aerospace and land systems
markets, today issues the following Interim Management Statement covering the period since
1 January 2013.
Overview
Market conditions and the Group’s performance in the first quarter have been consistent with
expectations at the time of our 26 February 2013 statement. Global light vehicle production was
down c.1% with deep declines in Europe and Japan partly offset by strong growth in China and
Brazil. Commercial aerospace improved while the weakness in construction and European
industrial markets, evidenced during 2012, continued.
(1)
Management basis
Sales
Trading profit
Trading margin
Profit before tax
(2)
2013
Q1
£m
2012
Q1
£m
Change
(%)
1,891
1,742
9
139
141
(1)
7.4%
8.1%
(0.7)pts
119
124
(4)
GKN has continued to make good progress with sales for the three months ended 31 March 2013
totalling £1,891 million, a 9% increase over the comparable period in 2012, or flat on an organic
basis. The increase in sales from acquisitions less divestments was £159 million.
Trading profit reduced slightly to £139 million, and included a £23 million charge for restructuring
and a £19 million contribution from acquisitions. Trading margin was 7.4%, or 8.6% excluding the
restructuring charges. Profit before taxation was £119 million, a 4% reduction over the
comparable period in 2012.
Net debt at 31 March 2013 was £940 million (31 December 2012: £871 million), reflecting a £40
million initial deferred consideration payment following the acquisition of Volvo Aero in October
2012 and the expected seasonal change in working capital levels.
Outlook
The outlook for GKN’s markets remains in line with our February statement and we continue to
expect 2013 to be a year of good progress.
Summary
Nigel Stein, Chief Executive, GKN plc, commented:
"We have met our expectations for the first quarter against the backdrop of challenging end
markets. Last year’s acquisition, GKN Aerospace Engine Systems (formerly Volvo Aero), is
performing well against our restructuring and integration plan and made a strong financial
contribution. With restructuring charges now largely behind us, we expect the remainder of the
year to show improvement, supported by our market leadership positions, advanced technology
and extensive global footprint."
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Divisional Markets and Performance
Automotive Market
Global light vehicle production in the first quarter of 20.8 million vehicles, was around 1% lower
than the comparable period in 2012, with good growth in China (+10%) and Brazil (+11%) being
offset by declines in Japan (-16%), Europe (-9%), India (-6%). North America increased 1%.
GKN Driveline
Sales
Trading profit
Trading margin
2013
Q1
£m
2012
Q1
£m
Change
(%)
844
847
-
51
64
(20)
6.0%
7.6%
(1.6)pts
GKN Driveline’s first quarter sales were slightly down at £844 million. Organic sales increased 1%
which was more than offset by adverse currency translation. After including restructuring charges
of £14 million, to reduce headcount in Europe and Japan, trading profit was £51 million. Trading
margin was 6.0%, or 7.7% excluding restructuring.
GKN Powder Metallurgy
Sales
Trading profit
Trading margin
2013
Q1
£m
2012
Q1
£m
Change
(%)
235
236
-
20
22
(9)
8.5%
9.3%
(0.8)pts
GKN Powder Metallurgy’s first quarter sales were broadly flat at £235 million, outperforming lower
automotive production in both Europe and North America. After including restructuring charges of
£4 million, trading profit was £20 million. Trading margin was 8.5%, or 10.2% excluding
restructuring.
GKN Aerospace
Sales
Trading profit
Trading margin
2013
Q1
£m
2012
Q1
£m
Change
(%)
544
370
47
54
36
50
9.9%
9.7%
0.2pts
GKN Aerospace markets continued to perform in line with expectations with the ramp-up of
commercial programmes more than offsetting the decline in military sales. Overall sales increased
47% to £544 million, with organic growth of 3%. Trading profit increased 50% to £54 million, with
the organic change in trading profit showing a decline of £1 million, largely due to the phasing of
sales on new commercial programmes. The trading margin improved to 9.9%. GKN Aerospace
Engine Systems, which was acquired on 1 October 2012, generated sales of £161 million, trading
profit of £19 million and trading margin of 11.8%.
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GKN Land Systems
Sales
Trading profit
Trading margin
2013
Q1
£m
2012
Q1
£m
Change
(%)
244
264
(8)
21
26
(19)
8.6%
9.8%
(1.2)pts
GKN Land Systems markets remain weak, particularly for construction and industrial equipment,
while the agricultural equipment market remained solid.
GKN Land Systems sales were down 8% at £244 million compared with a strong first quarter
performance in 2012. This reduction reflected underlying market conditions, customer de-stocking,
particularly in mining and construction, and the impact from the disposal of a small business in the
fourth quarter of 2012. Trading profit was £21 million, which included £2 million of restructuring
charges. The trading margin was 8.6%, or 9.4% excluding restructuring.
Other businesses
Sales in the quarter for GKN’s other businesses fell 4% to £24 million (2012: £25 million) due to a
fall in sales from Cylinder Liners. After including restructuring charges of £3 million in Emitec,
GKN’s other businesses reported a trading loss of £3 million (2012: trading profit of £1 million).
Capital Markets Day and Half Year Results Announcement
The Group intends to hold a Capital Markets Day in London at 13.30 on 21 May 2013. This event
will be viewable live on the Group’s website www.gkn.com.
The first half results are expected to be announced on 30 July 2013.
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.
Management profit or loss before tax is management trading profit less net subsidiary interest
payable and receivable and the Group’s share of net interest payable and receivable and taxation of
joint ventures. 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.
(2)
The Group has adopted the amendments to IAS 19 Employee benefits, which became effective on 1
January 2013. Consequently the comparative information, for the quarter ended 31 March 2012,
has been restated, with the effect of reducing trading profit and management profit before tax by £1
million.
Page 3 of 4
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 automotive, aerospace and land systems
markets. It has operations in more than 30 countries, around 50,000 employees in subsidiaries
and joint ventures and had sales of £6.9 billion in the year ended 31 December 2012. GKN plc is
listed on the London Stock Exchange (LSE: GKN).
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