29th Jul 2014 07:36
LONDON (Alliance News) - GKN PLC saw its shares jump at the market open Tuesday after the company said that pretax profit rose in its first-half while revenues declined marginally due to a currency translation impact.
In its results for the half-year to June 30, 2014, the British multinational automotive and aerospace components company said pretax profit rose 6% to GBP296 million from GBP278 million in the comparative period last year, with GBP24 million of adverse currency this half offsetting restructuring costs of GBP25 million in the first-half of 2013, said GKN.
The company recorded a marginal decline in revenue for the period, down 1% to GB3.83 billion from GBP3.387 billion as a GBP247 million currency translation impact hit its balance sheet. On an organic basis, revenue was up 6%.
The FTSE 100-listed company has increased its interim dividend to 2.8 pence per share, up 8% on the 2.6 pence per share paid in the first-half of 2013.
"This is another good performance, particularly in GKN Driveline which delivered 11% organic sales growth. We have continued to outperform our key markets and report good underlying financial results in spite of sterling's strength and some end market weakness - we expect these trends to be maintained in the second half. GKN is continuing to make encouraging progress against its strategy," said Chief Executive Nigel Stein.
On a divisional basis GKN said its Aerospace business saw 5% organic growth in commercial aerospace, which offset the 2% decline in military markets. GKN Driveline recorded growth "significantly ahead" of global auto production helped by increasing content per vehicle, said the business. The Powder Metallurgy division showed continued growth, ahead of global auto production, said GKN, as it continues to upgrade its North American capacity. Land Systems saw organic sales decline 9% on challenging market conditions and chassis contracts ending in 2013, said GKN.
Looking ahead, the company expects commercial aircraft production to continue to be strong whereas military markets are forecast to decline. GKN Aerospace's 2014 organic sales are expected to show modest growth, reflecting these conflicting trends, it said.
The strength of sterling is also expected to continue to adversely affect reported results, said the company, however, "the group's underlying progress is expected to continue due to the benefits of its diverse exposure to global markets, strong customer positions and healthy order books," said GKN.
Shares in GKN jumped at the market open, up 6.62% at 365.80 pence per share Tuesday morning, the biggest gainer on the FTSE 100.
By Alice Attwood; [email protected]; @AliceAtAlliance
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