GKN posts record annual profits

Engineering company GKN reported record annual profits Tuesday as sales grew across all four of its divisions.

Revenues climbed 13% to £6.9bn for 2012, up from £6.1bn the previous year, beating market expectations.

The company posted a 19% year-on-year increase in profit before tax of £497m following strong performance from operations including automotive and aerospace.

All four divisions - Driveline, Power Metallurgy, Aerospace and Land Systems -achieved higher sales during the period.

Aerospace, in particular, drove results as the group benefited from the acquisition of Volvo Aero and won new packages worth circa $1.4bn on a number of commercial programmes. The acquisition of Volvo Aero saw net debt increase to £871m from £538m in 2011.

Free cash flow, excluding Volvo Aero, was up from £147m to £213m.

"[Last year] was another strong year for GKN with record profits in all four divisions," Chief Executive Nigel Stein said.

"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 raised its dividend to 4.8p per share, taking the total for 2012 to 7.2p, a 20% jump.

Looking ahead, the company expects progress across the business, especially in aerospace as Airbus and Boeing increase production.

However, GKN anticipates a slump in European demand of light vehicle production will have an impact on results during the first half of the year.

Restructuring charges, mostly in the first quarter, are forecast to reach £16m in the Driveline unit and £5.0m in Power Metallurgy.

"GKN operates in global markets and has the capabilities needed to take advantage of the growth opportunities that those markets bring," Stein said.

"With the benefit of a full year contribution from Volvo Aero, we expect 2013 to be a year of good progress for the group."

RD