Profits surge by 33% as GKN switches gears

Posted on 31 Jul 2012

Profits at car and aircraft component manufacturer GKN rose by 33% for the first six months of 2012.

UK-based GKN saw sales rise by 16% compared to the first half of 2011, with a surge in demand for luxury cars as revenue increased from £2.99bn in 2011 to £3.46bn.

Sales at GKN Driveline, which makes transmissions, chassis and axles, soared from £1.33bn to £1.66bn.

However, sales of small cars have nosedived in Europe with many manufacturers making a loss in the region. GKN forecasts that light vehicle production will be lower in the second half of the year than in the first half.

GKN estimates that production should reach approximately 81 million vehicles for the whole of 2012, a yearly increase of nearly 5%, with the growth expected in Japan and North America counterbalancing a decline in Europe.

“The macroeconomic environment continues to be uncertain, with increasing headwinds in European auto markets,” said Nigel Stein, chief executive at GKN. “However, with the benefit of a good first half and the Group’s broad exposure to global markets, our expectations for 2012 remain unchanged.”

“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,” said Mr Stein.

With Boeing and Airbus ramping up production, sales at GKN Aerospace increased by 7% to £770m. The group’s acquisition of Volvo Aerospace looks set to strengthen its engine components business as it looks to capitalise on the Asian demand.

Growth in the commercial aerospace market is primed to offset the effects of lower production of US military aircraft.

It won new work on Boeing 787, 525 Bell helicopter and Bombardier business jets during the first six months of the year.

GKN is set to open a new facility in Mexico to manufacture composite structural components for Blackhawk helicopters.