GKN plc Results Announcement for the year ended 31 December 2017
|Management basis(a)||Statutory basis|
|Trading margin (%)||6.4%||8.2%||-180bps|
|Profit before tax||572||678||-16||658||292||+125(c)|
|Earnings per share (p)||26.6p||31.0p||-14||29.3p||14.1p||+108(c)|
|Dividend per share (p)||9.30p||8.85p||+5||9.30p||8.85p||+5|
|Free cash flow||207||201|
(a) Financial information set out in this announcement, unless otherwise stated, is presented on a management basis.
(b) Including £112 million North American Aerospace balance sheet review adjustments.
(c) Primarily higher due to mark to market valuation of FX contracts.
- Results in line with previous guidance
- Management sales up 11% (organic sales up 6%), exceeding £10 billion for the first time;
- Excluding £112 million North American Aerospace balance sheet review adjustments:
- Operating profit (management basis) of £774 million (2016: £773 million);
- Earnings per share up 2% to 31.7 pence (2016: 31.0 pence);
- Reported profit before tax £658 million (2016: £292 million), a rise of 125%(c);
- Pensions progress - UK defined benefit scheme closed to future accrual, £250 million lump sum paid to reduce the deficit and the level of future deficit recovery payments;
- Free cash flow of £207 million (2016: £201 million).
- Technology investments continue to deliver business results
- Strong technology pipeline; innovation recognised by customer and industry awards;
- Order book on electrified drivelines reaches more than £2 billion;
- Ramp up of new engine deliveries to increase significantly;
- Breakthrough contracts in place in GKN Powder Metallurgy additive manufacturing for major auto OEMs; selling product profitably today.
- New product segment strategy and Project Boost announced and being implemented
- Expected to generate £340 million p.a. of recurring cash benefit from end of 20201;
- Targeting up to £2.5 billion cash return to shareholders over the next three years2;
- New core segment trading margin targets for 20203: GKN Aerospace at least 14%, GKN Driveline at least 9.5%, Group 11%;
- Aim to formally separate GKN Aerospace and GKN Driveline into two listed companies via a demerger in the middle of 2019.