Business highlights
- Sales broadly level; (1)Profit before tax up 8%; (1)Earnings per share up 29%
- Aerospace delivers 11% increase in sales, 30% increase in trading profit
- Powder Metallurgy trading profit more than doubles; US Sinter operations return to profit
- OffHighway sales up 7%; trading profit up 15%
- Driveline profits lower - significant new business wins support future growth
- Dividend increased by 5% to 12.8p reflecting the Board's continuing confidence
Kevin Smith, Chief Executive of GKN plc, commented:
"Our performance in 2006 shows GKN making excellent progress with results ahead of expectations and major milestones achieved which will help secure sustainable growth.
"Aerospace grew sales by 11%, profits by 30% and moved into double digit margins.
"US Sinter moved back into profit and overall Powder Metallurgy margins more than doubled to above 5%.
"Our confidence in the future is also being reinforced by high levels of new business wins. Driveshafts won 75% by volume of all new available programmes, Sinter's new business wins were up 30% and Aerospace brought in orders worth $850 million.
"Acquisitions have secured technology leadership in aerospace titanium structures, increased our exposure to the civil aviation sector, provided an entry into the China offhighway market and enlarged our presence in the construction sector.
"We continue the rapid development of our business in high growth markets with three new plants becoming operational in China and two new plants in India.
"Our strategic restructuring plan launched in 2004 has now moved into its final phase and will conclude this year.
"We have entered 2007 with our four major businesses - Driveline, Powder Metallurgy, OffHighway and Aerospace - in great shape and all well positioned to drive growth."
2007 Outlook
The outlook for our major markets is positive, despite some uncertainty around the strength of North American automotive demand.
Forecasts for the global automotive market remain mixed with overall growth in 2007 production projected at 3-4%. Within this, Western European output is forecast to be broadly unchanged and North American demand is also expected to be at a similar level to 2006, although slightly down in the first half. Good growth is expected in emerging markets including China and India, which represent a growing percentage of the Group's sales.
OffHighway demand in North America is slightly down on last year although sentiment appears to be improving; European markets and the mining and heavy construction sectors generally are expected to be good.
Aerospace markets in all sectors are expected to remain strong.
Raw material input costs remain volatile, but the Group is not expecting them to make a major impact on 2007 performance compared to 2006.
Against this background, in 2007 the Group expects to see further improvement in its Automotive businesses and continuing growth in OffHighway and Aerospace. Driveline will benefit from the successful restructuring programme which should allow it to recover much of the ground lost in 2006. Powder Metallurgy and Aerospace should see good top line growth helped by a strong backlog of booked business. Performance in our retained Other Automotive businesses should also improve. The acquisitions made in 2006 are integrating well and will also contribute to revenue and profit growth in 2007.
Overall, we expect the Group to see another year of good progress, with the high level of business wins in 2006 supplemented by further bolt-on acquisitions giving us confidence for this year and beyond.
Further enquiries
GKN Corporate Communications
Tel:+44 (0)20 7463 23544
The full text of this press release together with the attached financial statements and notes thereto are attached to this news story.
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