- Another year of growth delivering earnings momentum
- Sales up 22% and management eps increased 12%
- Continued market outperformance with organic sales up 2%
- Strong performance from Fokker Technologies (“Fokker”) in first full year of ownership
- Profit before tax (management basis) up 12% to £678 million (2015: £603 million), including £39 million restructuring charge
- Reported profit before tax £292 million (2015: £245 million)
- Free cash flow of £201 million (2015: £370 million), lower due to the absence of a significant customer advance that benefited 2015
- Momentum of new business wins continues to support growth ahead of markets
- Sharpening the focus
- Group-wide fixed cost reduction programme resulted in a restructuring charge of £39 million - annualised savings of £30 million
- Disposal of Stromag completed; GKN focused on three core divisions and two end markets
- Capital allocation to be progressively directed towards productivity improvement in core aerospace and automotive divisions
- Continued investment in technology
- Strong technology pipeline; innovation recognised by customer and industry awards
- Primary focus - electrified drivetrains and additive manufacturing (3D printing)
|Management basis(1)||As reported|
|Trading margin (%)||8.2%||8.8%||-60bps|
|Profit before tax||678||603||+12||292||245||+19|
|Earnings per share (p)||31.0p||27.8p||+12||14.1p||11.8p||+19|
|Dividend per share (p)||8.85p||8.7p||+2||8.85p||8.7p||+2|
|Free cash flow||201||370|
(1) Financial information set out on this page, unless otherwise stated, is presented on a management basis
Commenting on the results, Nigel Stein, Chief Executive of GKN said:
“This is a good set of results with GKN continuing to make underlying progress in line with our expectations. We performed well against our key markets, overcoming some demand weakness and demonstrating once again the strength of our businesses, strong market positions and leading technology. Strategically we made good progress, including smoothly integrating Fokker and completing the disposal of Stromag – evidence of our sharper focus on capital allocation towards Aerospace and Automotive markets.
We expect 2017 to be another year of further growth, helped by the benefits of the actions taken in 2016 and GKN’s constant focus on continuous improvement.”
- Strong headline sales growth, reflecting a full year of Fokker and organic growth above the market
- Organic sales growth in commercial aerospace (+3%) partly offset by decline in military (-2%)
- Margin of 10.2% (2015: 10.9%), excluding the £10 million restructuring, primarily impacted by the inclusion of Fokker, ramp up costs on new engines and mature programmes declining
- Fokker sales and margin ahead of expectations
- New and replacement work packages won exceed $7 billion
- Organic sales growth of 6%, ahead of global auto production, helped by our broad geographic footprint and increased content per vehicle
- Trading margin of 7.9% (2015: 8.2%), excluding the £10 million restructuring charge, with a good performance in Europe and China offset by excess launch costs on a significant US all-wheel drive (AWD) programme
- Around £1 billion of annualised new and replacement business won
GKN Powder Metallurgy
- Organic sales growth of 1%, before the pass-through of lower raw material surcharges
- Trading margin of 11.7% (2015: 12.0%), excluding the £3 million restructuring charge, reflecting a powder investment in China and a weaker North America
- Strong focus on technology and £200 million annualised new and replacement business won
GKN Land Systems
- Organic sales down 8% due to challenging agricultural and construction equipment markets and the ending of two chassis contracts
- Trading margin of 4.5% (2015: 3.5%), excluding the £14 million restructuring charge
- Stromag sale completed on 30 December 2016
- Remaining GKN Land Systems businesses absorbed into GKN Driveline and Other Businesses from 1 January 2017
According to Teal forecasts, in 2017, the overall aerospace market is expected to be up 2%, with commercial deliveries 1% lower and military sales up 14%. Against that backdrop, GKN Aerospace’s 2017 organic sales are expected to grow slightly above the market.
In automotive, external forecasts predict growth in global light vehicle production of around 2% with increases in China and Europe, but North America down. Against this background, GKN Driveline and GKN Powder Metallurgy are expected to grow organically above the market.
2017 is expected to be another year of further growth, helped by the benefits of the actions taken in 2016 and GKN’s constant focus on continuous improvement.
(1) Financial information set out in this announcement, unless otherwise stated, is presented on a management basis as defined on page 14.
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.
Guy Stainer, Investor Relations Director, GKN plc
T: +44 (0)207 463 2382
M: +44 (0)7739 778187
Chris Fox, Group Communications Director, GKN plc
T: +44 (0)1527 533238
M: +44 (0)7920 540051
Andrew Lorenz, FTI Consulting
T: +44 (0)203 727 1323
M: +44 (0)7775 641807
There will be an analyst and investor meeting today at 09.00am at UBS, 5 Broadgate, London, EC2M 2QS in their Conference Suite located on the first floor.
A live videocast of the presentation will be available at http://www.gkn.com/en/investors/results-centre/webcasts/.
Slides will be put onto the GKN website approximately 60 minutes before the presentation is due to begin, and will be available to download from the GKN website at: http://www.gkn.com/en/investors/results-centre/.
Questions will only be taken at the event.
A live dial in facility will be available by telephoning: +44 (0) 1452 555 566, Conf ID: 71571846
Following the event, a replay of the conference call will be uploaded onto the GKN website and the on-demand archive webcast will be available via the link