(*) 2011 includes a £23 million charge and 2012 includes a net £2 million credit following a further insurance claim recovery relating to the 2011 temporary Hoeganaes plant closure in Gallatin, USA.
Group highlights(1)
- Group results reflect the continued strong organic growth in all four Divisions and the contribution from acquisitions:
- Sales up 16% (£471 million) to £3,459 million, +8% on an organic basis;
- Excluding the 2011 effects of the Gallatin incident:
- Management trading (operating) profit up 19% to £293 million;
- Trading margin improved to 8.5%;
- Profit before tax increased 19% to £266 million;
- Earnings per share up 22% to 14.4 pence per share;
- Return on average invested capital reduced to 17.2% (2011: 18.1%), reflecting the 2011 acquisitions.
- Reported profit before tax of £289 million (2011: £202 million).
- Positive free cash flow of £28 million (2011: £25 million).
- Net debt of £590 million (31 December 2011: £538 million).
- Since 30 June 2012:
- Announcement of agreement to acquire Volvo Aero, significantly strengthening GKN Aerospace’s engine components business.
“GKN has continued to make good progress both in terms of financial performance and implementing our strategy to build a global market-leading business. First half trading has seen sales increases and margin progression for each of our four Divisions and our new acquisitions, Stromag and Getrag Driveline Products, are performing well.
As a result of the strong performance and confidence in the future, the Board has decided to increase the interim dividend by 20% to 2.4 pence per share.
The macroeconomic environment continues to be uncertain, with increasing headwinds in European auto markets. However, with the benefit of a good first half and the Group’s broad exposure to global markets, our expectations for 2012 remain unchanged. We expect 2012 to be another good year of progress for GKN and, in addition, we look forward to welcoming our new acquisition, Volvo Aero, into GKN when the transaction completes in the next few months.”
Nigel Stein
Chief Executive, GKN plc
Divisional highlights |
Sales
(£m) |
Organic sales growth |
Trading margin
% |
2012 |
2011 |
% |
2012 |
2011 |
GKN Driveline |
1,664 |
1,333 |
9 |
7.3 |
7.1 |
GKN Powder Metallurgy |
465 |
435 |
9 |
10.1 |
9.0 |
GKN Aerospace |
770 |
723 |
7 |
11.2 |
11.1 |
GKN Land Systems |
512 |
444 |
6 |
10.2 |
8.8 |
|
|
|
|
|
|
Group |
3,459 |
2,988 |
8 |
8.5(*) |
7.5(*) |
(*) 2011 includes a £23 million charge and 2012 includes a net £2 million credit following a further insurance claim recovery relating to the 2011 temporary Hoeganaes plant closure in Gallatin, USA.
The table does not include Other businesses (Cylinder Liners and Emitec).
GKN Driveline
- Getrag Driveline Products acquisition integrated and delivering ahead of expectations.
- Good progress made in all-wheel drive (AWD) systems, particularly with electronic differential lockers (EDLs).
GKN Powder Metallurgy
- Continued strong product development and £80 million of new business awarded.
- Trading margin improved 110bps, to 10.1%.
GKN Aerospace
- New facility to open in Mexico to manufacture composite structural components for Blackhawk helicopters.
- New work packages won on Boeing 787, 525 Bell helicopter, Bombardier business jets and others.
GKN Land Systems
- Stromag acquisition integrated and performing well. Now leveraging its customers and sales network to offer enhanced customer solutions from the Division’s combined technologies.
- Trading margin improved 140bps, to 10.2%.
Outlook
Although the macroeconomic environment remains uncertain, the Group’s broad exposure to global markets and strong customer positions mean that GKN should make good progress in 2012, helped by the full year contribution from the acquisitions in 2011 of Getrag Driveline Products and Stromag.
In automotive, external forecasts suggest that global light vehicle production in the second half will be lower than the first half, but should reach approximately 81 million vehicles for the whole of 2012, an increase of nearly 5%. The strongest annual growth is expected in Japan and North America with a decline in Europe.
Against this background, GKN Driveline is expected to show good year-on-year improvement, although the rate of growth will slow slightly due to stronger second half 2011 comparators as the effects of the Japanese tsunami unwind. GKN Powder Metallurgy expects sales to be lower than the first half reflecting normal seasonality and weaker European markets.
In aerospace, civil aircraft production is expected to continue to grow, as both Airbus and Boeing increase production. This should more than offset the effects of lower production of US military aircraft.
The performance of GKN Land Systems should continue to show an improvement, benefiting from the expected on-going strength in European and North American agricultural equipment markets partially offset by weaker European industrial markets. Sales in the second half are expected to show a reduction when compared with the first half, due to normal seasonal patterns.
For the year as a whole, free cash flow is expected to exceed 2011’s £147 million, before the impact of the Volvo Aero acquisition which is expected to complete around the end of the third quarter.
In the final quarter of 2012, Volvo Aero is expected to achieve a profit from its trading activities but have a negative impact on the Group’s reported profit due to integration costs and acquisition accounting adjustments. In 2013, the first full year of ownership, Volvo Aero’s contribution is expected to be earnings enhancing.
Notes
(1) Financial information set out in this announcement, unless otherwise stated, is presented on a management basis as set out on page 14 of the full release PDF.
Cautionary Statement
This announcement contains forward looking statements which are made in good faith based on the information available to 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 statement should be regarded as a profit forecast.
Further Enquiries
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
Andrew Lorenz
FTI Consulting
T: +44 (0)207 269 7113
M: +44 (0)7775 641807
There will be an analyst and investor meeting today at 09.30am at UBS, Ground Floor Presentation Suite, 1 Finsbury Avenue, London EC2M 2PP.
A live audiocast of the presentation will be available on our Webcasts page. Slides will be put onto the GKN website approximately 15 minutes before the presentation is due to begin, and will be available to download from the results and presentation page on the GKN website on the results and presentations page. Questions may be asked at the event or via the webcast.
A live dial in facility will be available by telephoning:
Standard International Dial In: +44 (0) 1452 555 566
Conf ID: 11156527#
A replay of the conference call will be available until 13 August 2012 on:
Standard International Number: +44 (0) 1452 550 000
Replay Access Number: 11156527#
|