Interim Management Statement

GKN plc

Interim Management Statement

19 October 2010

GKN plc, the global engineering business that serves the automotive, aerospace and land systems markets, today issues the following Interim Management Statement covering the period since 1 July 2010.

Overview

GKN continued to make strong progress through the third quarter and expects a solid close to the year.

Group sales in the three months ended 30 September 2010 totalled £1,336 million, a 21% increase over the comparable period in 2009. Favourable currency translation and acquisitions increased sales by £40 million and therefore underlying sales increased by 17%.

Third quarter trading profit was £100 million, a 92% increase over the comparable period in 2009, or an 87% underlying increase. The Group's profit before taxation was £88 million. Net debt at 30 September 2010 was £212 million (30 June 2010: £202 million).

GKN Markets and Performance

Automotive 

Overall demand during the third quarter remained at similar levels to the second quarter, with the European seasonal decline less than normal and strong demand in North America and Asia.

GKN's Automotive (Driveline and Powder Metallurgy) third quarter sales increased by 34% compared with last year, to £800 million (2009: £598 million), up 28% on an underlying basis. Trading profit was £55 million (2009: £14 million). Overall, Automotive trading margin was 6.9%, with Powder Metallurgy trading margin at 7.9% and Driveline at 6.6%. Driveline's profits were held back somewhat during the quarter as a result of additional temporary labour costs in Europe to meet higher than expected customer demand during the holiday season and increased raw material costs which should largely be recovered over coming months.

Aerospace

Aerospace markets continued to perform broadly in line with expectations although the seasonal decline in third quarter sales in Europe proved somewhat greater than normal. It is expected that this shortfall will be caught up by the year end.

Aerospace's third quarter sales were down 3% on last year at £349 million (2009: £361 million) and down 7% on an underlying basis. Trading profit was £39 million (2009: £43 million) and the trading margin was 11.2%.

Land Systems

The markets for Land Systems returned to normal third quarter seasonal patterns and GKN sales were 11% lower than the second quarter.

Compared with last year, Land Systems' third quarter sales were up 30% at £165 million (2009: £127 million) with trading profit of £8 million (2009: trading loss of £3 million) and a trading margin of 4.8%.

Net Debt

Net debt at 30 September 2010 was £212 million, £10 million higher than the position at 30 June 2010, with the interim dividend payment (£23 million), pension deficit contribution (£11 million) and funding of our contribution to Emitec's acquisition of Grundfos NoNOx Holding A/S (£8 million) all being met in the period. Net debt is expected to be below £200 million at the year end.

Outlook

The outlook for GKN's markets in the fourth quarter remains positive with Group sales expected to be at a similar level to the third quarter.

In Automotive, production schedules support another solid quarter for Driveline and Powder Metallurgy.

Land Systems sales are expected to be broadly flat.

Aerospace is expected to have a strong fourth quarter as sales delayed during the summer shut down period are recovered over the balance of the year.

New business win rates have again been impressive with Driveline having secured around 80% of available driveshaft business so far this year and further orders for all-wheel drive and electric transmission products. Order intake in Powder Metallurgy has also been strong. In addition, the approval of US Congress for a four year multi year purchase of F-18 aircraft and the proposed exports of F-15 aircraft and Black Hawk helicopters to Saudi Arabia are encouraging for GKN Aerospace's defence business, which is almost entirely through the US Government.

In summary, GKN continues to make excellent progress through 2010 and the strength of our market positions and healthy order books give confidence in our prospects for 2011 and beyond.

Final Results Announcement

The Group intends to issue its full year results announcement on 1 March 2011.

Notes

(1) Financial information set out in this announcement, unless otherwise stated, is presented on a management basis which aggregates the sales and trading profit of subsidiaries (excluding subsidiary businesses sold and closed) with the Group's share of the sales and trading profit of joint ventures. Trading margin is trading profit expressed as a percentage of sales. Management profit or loss before tax is management trading profit less net subsidiary interest payable and receivable and the Group's share of net interest payable and receivable and taxation of joint ventures. These figures better reflect performance of continuing businesses. Where appropriate, reference is made to underlying results which exclude the impact of acquisitions as well as currency translation on the results of overseas operations.

(2) Comparative data has been restated following the announcement to exit the Axles operations of the former OffHighway segment.

(3) Segmental data has been restated following the launch of Land Systems which was announced on 16 June 2010.

For further information:

Guy Stainer

Director, Investor Relations and External Communications

T: +44 (0)207 463 2382

M: +44 (0)7739 778 187

E: [email protected]

Andrew Lorenz

Financial Dynamics

T: +44 (0)20 7269 7113

M: +44 (0)7775 641 807

Cautionary Statement

This announcement contains forward looking statements which are made in good faith based on the information available to the time of its approval. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a number of risks and uncertainties that are inherent in any forward looking statement which could cause actual results to differ materially from those currently anticipated.

Notes to Editors

GKN plc is a global engineering business serving the automotive, aerospace and land systems markets. It has operations in more than 30 countries, around 40,000 employees in subsidiaries and joint ventures and had sales of £4.5 billion in the year ended 31 December 2009. GKN plc is listed on the London Stock Exchange (LSE: GKN).