Group highlights(1)
- Group results reflect the continued strong organic growth and the contribution from acquisitions
- Record profits achieved in all four divisions
- Sales increased 13%, up 6% on an organic basis
- Management trading (operating) profit up 19%
- Trading margin improved to 8.1%
- Profit before tax up 19%
- Return on average invested capital of 18.1% (excluding Volvo Aero)
- Earnings per share up 17%
- Final dividend of 4.8 pence per share, giving a total for 2012 of 7.2 pence per share, a 20% increase
- Reported profit before tax of £588 million (2011: £351 million)
- Positive free cash flow of £213 million (2011: £147 million), excluding Volvo Aero
- Net debt of £871 million (2011: £538 million), reflecting the acquisition of Volvo Aero.
“2012 was another strong year for GKN with record profits in all four divisions. The Group has continued to make good progress financially and in implementing our strategy to build a market-leading global business, with excellent technology, a focus on operational excellence and above-market growth.
GKN operates in global markets and has the capabilities needed to take advantage of the growth opportunities that those markets bring. With the benefit of a full year contribution from Volvo Aero, we expect 2013 to be a year of good progress for the Group.”
Nigel Stein
Chief Executive, GKN plc
Divisional highlights
| |
Sales
(£m) |
Organic sales growth |
Trading margin
% |
| 2012 |
2011 |
% |
2012 |
2011 |
| GKN Driveline |
3,236 |
2,795 |
7 |
7.3 |
7.0 |
| GKN Powder Metallurgy |
874 |
845 |
7 |
10.0 |
8.5 |
| GKN Aerospace(1) |
1,584 |
1,481 |
8 |
11.2 |
11.2 |
| GKN Land Systems |
933 |
885 |
1 |
9.4 |
7.6 |
| |
|
|
|
|
|
| Group |
6,904 |
6,112 |
6 |
8.5(2) |
7.7 |
(1) GKN Aerospace excludes the fourth quarter contribution from Volvo Aero.
(2) 8.4% excluding Volvo Aero
The table does not include Other businesses (Cylinder Liners and Emitec).
GKN Driveline
- GKN Driveline continued its expansion in Mexico and also in China, where output reached a record 12 million driveshafts in the year
- Growth above the market with additional business wins in Constant Velocity Jointed (CVJ) Systems
- Integration of Getrag Driveline Products completed and good progress made in all-wheel drive (AWD) new business wins, including the design and build of a complete AWD system for three customers
GKN Powder Metallurgy
- Continued strong product development and new business awarded of £120 million of annualised sales
- Received supplier quality excellence awards from General Motors (GM) Powertrain, placing GKN Sinter Metals within the top 2% of all GM Powertrain suppliers
- Trading margin improved 150bps, to 10.0%.
GKN Aerospace
- Acquisition of Volvo Aero successfully completed and integration proceeding well
- New work packages won worth c$1.4 billion, on a number of key commercial programmes
- A350XWB in start-up phase
GKN Landsystems
- Integration of Stromag completed
- Created a specialist centre for mining wheels and started the manufacture of double universal joints for tractors in Liuzhou, China
- Trading margin improved 140bps, to 9.4%.
Outlook
GKN expects 2013 overall to be a year of good progress for the Group. In automotive, external forecasts suggest that global light vehicle production should grow around 2% with increases in Asia and North America but Europe down.
Against this background, GKN Driveline and GKN Powder Metallurgy are expected to show further improvement in 2013 overall. However, the first half results will be impacted by lower market demand in Europe and, recognising that the market is unlikely to recover for some time, actions are being taken to reduce the fixed cost base. Restructuring charges, primarily in the first quarter, are expected to be £16 million in GKN Driveline and £5 million in GKN Powder Metallurgy.
In aerospace, commercial aircraft production is expected to continue to grow, as both Airbus and Boeing increase production, whereas US military aircraft demand is expected to decline. GKN Aerospace’s commercial aircraft sales growth is broadly expected to offset lower military sales and the impact of the ending of the previously announced £100 million supply chain contract with Airbus (see page 9 for further details).
The integration of Volvo Aero is progressing well. The Group remains confident of meeting its guidance on first year sales, margin and returns.
The performance of GKN Land Systems is expected to be broadly flat for 2013 as a whole, with the first few months more challenging due to weaker European industrial and passenger vehicle markets. European and North American agricultural equipment markets are expected to remain robust.
Overall, the Group’s broad exposure to global markets, strong customer positions and healthy order books mean that GKN should make good progress in 2013, benefiting from the full year contribution from Volvo Aero.
Notes
(1) Financial information set out in this announcement, unless otherwise stated, is presented on a management basis as defined on page 17.
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 document should be regarded as a profits 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 http://www.gkn.com/investorrelations/GKNResults/full-year-results-2012-presentation.pdf.
Questions will only be taken at the event.
A live dial in facility will be available by telephoning:
Standard International Dial In: +44 (0) 1452 555 566, Conf ID: 95082636#
A replay of the conference call will be available until 25 March 2013 on:
Standard International Number: +44 (0) 1452 550 000
This announcement together with the attached financial information thereto may be downloaded from: www.gkn.com/media/Pages/default.aspx. |