Interim Management Statement

18/04/2012 07:00
Financial

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 2012.


Overview
 
Market conditions in the first quarter have been consistent with expectations at the time of our 28
February 2012 statement, with global light vehicle production up 4%, civil aerospace improving and further growth in the agricultural and construction/mining markets.

 
Management basis(1)
        2012
         2011
 
  Q1
  £m
  Q1
  £m
  Change
  (%)
    Sales
    Trading profit
    Trading margin (%)
   
Profit before tax
  1,742
  142
  8.2%
  125
  1,487
  119
  8.0%
  107
  17
  19
  0.2pts
  17
 
GKN has continued to make good progress with sales for the three months ended 31 March 2012 totalling £1,742 million, a 17% increase over the comparable period in 2011, or an 8% increase on an underlying basis. The increase in sales from acquisitions less divestments was £143 million.
 
Helped by a strong performance from both the 2011 acquisitions, trading profit increased to £142 million, representing a 19% increase, with a margin of 8.2%.  Margin improvement was achieved in all four divisions.  Profit before taxation was £125 million, up 17% over the comparable period in
2011.
 
Net debt at 31 March 2012 was £625 million (31 December 2011: £538 million), reflecting the previously announced higher capital expenditure to support growth in the business and the expected seasonal increase in working capital.
 
Outlook
 
Overall, the outlook for GKN’s markets remains in line with our February statement.

Summary
 
Nigel Stein, Chief Executive, GKN plc, commented:
 
"GKN has made an excellent start to the year with sales up 17% and margin improvement in all four divisions.  Last years acquisitions, Getrag Driveline Products and Stromag, have been successfully integrated and both made a strong contribution.  Despite some macro-economic uncertainty, we expect 2012 to be a year of good progress for GKN based on our market leadership positions, advanced technology and extensive global footprint."

Divisional Markets and Performance
 
Automotive Market
 
Global light vehicle production increased by 4% in the first quarter to 20.4 million vehicles, with good growth in Japan (+49%), North America (+15%) and India (+5%) more than offsetting declines in Brazil (-10%), Europe (-8%), and China (-4%).

GKN Driveline
 
 
 
        2012
         2011
 
  Q1
  £m
  Q1
  £m
  Change
  (%)
    Sales
    Trading profit
    Trading margin (%)
  847
  64
  7.6%
  673
  50
  7.4%
  26
  28
  0.2pts
 
GKN Drivelines first quarter sales increased 26% to £847 million.  Underlying sales increased 8%, with GKN Driveline significantly outperforming global light vehicle production and achieving growth in every major market except Brazil.  Trading profit increased 28% to £64 million.  GKN Driveline’s trading margin was 7.6%, with the acquired Getrag Driveline Products business performing strongly.


GKN Powder Metallurgy
 
 
        2012
         2011
 
  Q1
  £m
  Q1
  £m
  Change
  (%)
    Sales
    Trading profit
    Trading margin (%)
  236
  22
  9.3%
  217
  20
  9.2%
  9
  10
  0.1pts
 
GKN Powder Metallurgys first quarter sales increased 9% to £236 million, benefiting from good growth in North American automotive production and new programme launches across the Division.  Trading profit was £22 million with the trading margin improving to 9.3%.


GKN Aerospace
 
 
        2012
         2011
 
  Q1
  £m
  Q1
  £m
  Change
  (%)
    Sales
    Trading profit
    Trading margin (%)
  370
  36
  9.7%
  352
  32
  9.1%
  5
  13
  0.6pts
 
GKN Aerospace markets continued to perform in line with expectations with the ramp-up of a number of civil programmes more than offsetting the decline in military sales.  Sales increased 5% to £370 million.  Trading profit increased 13% to £36 million and the trading margin improved to 9.7%.


G
KN Land Systems
 
 
        2012
         2011
 
  Q1
  £m
  Q1
  £m
  Change
  (%)
    Sales
    Trading profit
    Trading margin (%)
  264
  26
  9.8%
  220
  18
  8.2%
  20
  44
  1.6pts
 
GKN Land Systems markets have continued to improve, with solid demand for mining and construction equipment and the European agricultural equipment market performing robustly.
 
GKN Land Systems sales were up 20% at £264 million, an increase of 8% on an underlying basis. Trading profit was £26 million and the trading margin improved substantially to 9.8%, reflecting a significant improvement in the underlying business and the impact of the Stromag acquisition, which performed well during the period.


Half Year Results Announcement
 
The Group intends to issue its half year results announcement on 31 July 2012.


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 Groups 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 Groups 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 underlying results which exclude the impact of acquisitions/divestments as well as currency translation on the results of overseas operations.


Further information:
 
Analysts/Investors:
 
Guy Stainer
Investor Relations Director
GKN plc
T: +44 (0)207 463 2382
M: +44 (0)7739 778187
 
Media:
 
Chris Fox
Group Communications Director
GKN plc
T: +44 (0)1527 533238
M: +44 (0)7920 540051

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 44,000 employees in subsidiaries and joint ventures and had sales of £6.1 billion in the year ended 31 December 2011. GKN plc is listed on the London Stock Exchange (LSE: GKN).