Financial highlights

GKN plc Results Announcement for the year ended 31 December 2017

 Management basis(a)Statutory basis
 2017(b)2016Change20172016Change
 £m£m%£m£m%
Sales 10,409 9,414 +11 9,671 8,882 +10
Operating profit 662 773 -14 699 335 +109(c)
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        
Net debt 889 704        

(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.

Group Highlights(a)

  • 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.