GKN to fend off dollar’s impact

GKN said it could cope with the impact of a weak dollar versus the pound after reporting a 17 per cent rise in 2013 profits and forecasting strong demand for car and airplane parts.

The group, which makes chassis and axles for carmakers such as Volkswagen and airframes for planemakers Airbus and Boeing, forecast that its auto business would grow this year at a faster rate than an anticipated 3 per cent expansion in the market, and said its aerospace unit would post higher sales.

But chief executive Nigel Stein said: “The dollar is going to be a headwind. It’s been a tough start.”

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He said a one per cent move in the dollar would have around a £4m impact on profit, but he was confident that the company could offset that.

“This should be outweighed by the benefits from the group’s diverse exposure to global markets, strong customer positions and healthy order books.”

Shares in GKN fell more than 2.0 per cent, making it one of the top fallers in the bluechip stock index. Analysts attributed the drop partly to the stock’s strong run – the shares have risen 11 per cent since the start of 2014 and 64 per cent in the last 12 months – plus worries over adverse currency movements.

Analysts at Investec said they expected to tweak their forecasts to account for the foreign exchange moves. Jefferies added that the comments on currency could be seen as disappointing.

“Today’s 2013 result is ahead of our forecasts, but the 2014 outlook may not be enough to add momentum to the equity story,” Jefferies said.

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