GKN profit boost but it warns over uncertainty

Car parts and engineering firm GKN yesterday posted its best profits since the onset of recession but warned of lingering uncertainty in its main automotive market.

Pre-tax profits of 71m for the first quarter represented GKN's

strongest performance since early 2008 but visibility over client intentions is "somewhat limited" for the second half of this year.

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The automotive business, which supplies components such as drive shafts to almost half of all new cars, accounted for two-thirds of GKN's 1.3bn first-quarter revenues.

The firm has around 6,000 staff in the UK, with an automotive plant in Birmingham and aerospace sites at Filton near Bristol, Yeovil, and the Isle of Wight.

Adjusted for currency impacts, the group said underlying group sales were 26 per cent ahead of the opening three months of 2009.

GKN said the outlook for its major markets was "mainly positive" although the firm added that second half sales would be below the first half of the year.

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The group also warned of a temporary squeeze on margins due to delays in passing on the rising cost of raw materials such as scrap metal on to customers.

GKN's off-highway business – which supplies equipment to industrial sectors – was hit hard by the global slump but also reported continued improvement in the first quarter driven by demand for mining and heavy construction gear.

Sales, however, remain 19 per cent below the same period a year earlier.