Europe sales prove drag on GKN

The firm beat forecasts yesterday with a 19 per cent rise in 2012 pre-tax profit helped by demand for luxury cars from makers such as Jaguar Land Rover and Audi in China, the world’s biggest autos market.

“I don’t see the European small car market recovering this year, the best we can expect is flat sales,” chief executive Nigel Stein said, adding that profits in the first half of this year would be hit by a £21m charge to help lower costs at its autos businesses.

“But the US and Asia should continue to grow and more than offset softness in Europe,” he added.

Demand for new cars has slumped in Europe as governments drive through austerity measures to reduce their debts. Asian and US markets, in contrast, have bounced back strongly from the global financial crisis.

US car sales rose 13.4 per cent last year to their highest level since 2007, while European sales slumped to a 17-year low.

Car sales in the United States are forecast to grow 4.9 per cent in 2013 while European sales are expected to decline 1.7 per cent, according to industry data.

“In 2013, GKN will have to take the rough with the smooth. We envisage most of the rough in the first half and the smoother part in the second half,” said Jefferies analyst Sandy Morris.

GKN said group pre-tax profits climbed to £497m last year, beating analysts’ average forecast of £475m in a Reuters poll.