Interim Management Statement

NEWS RELEASE

GKN plc

Interim Management Statement

22 October 2013

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

1 July 2013.

Overview

Market conditions and the Group's performance in the third quarter have been consistent with expectations at the time of our 30 July 2013 statement. Commercial aerospace was strong while military aerospace and spares showed a continuation of the weaker demand evidenced in the first half. Global light vehicle production increased 4% with good growth in China and North America whilst Europe and Japan improved slightly. The weakness in construction and industrial markets continued while agricultural equipment demand remained broadly flat.

Group Results  

GKN made good progress in the three months ended 30 September 2013. Sales totalled £1,865 million, a 16% increase over the comparable period in 2012, including 6% organic growth. The increase in sales from acquisitions less divestments was £145 million.

Third quarter trading profit increased to £152 million (2012: £113 million). Trading margin increased to 8.2% (2012: 7.0%), as a result of improved profitability in the underlying business and a £21 million contribution from GKN Aerospace Engine Systems. Group profit before taxation increased 34% to £131 million.

There has been no material change to the Group's financial position with net debt at 30 September 2013 of £973 million (30 June 2013: £928 million), following the payment of the interim dividend and the final payment for GKN Aerospace Engine Systems.

Outlook

Automotive and commercial aerospace markets are expected to remain robust with industrial and military aerospace markets soft. As previously stated, the Group expects 2013 overall to show another year of good progress helped by the contribution of GKN Aerospace Engine Systems.

Summary

Nigel Stein, Chief Executive, GKN plc, commented:

"The third quarter showed good progress, supported by automotive demand in China and North America and sustained high output levels in commercial aerospace. GKN Aerospace Engine Systems made a strong contribution to the Group's 34% growth in profit before tax."

Divisional Markets and Performance

GKN Aerospace

GKN Aerospace markets showed strong organic growth in commercial aerospace partly offset by the continuing decline in military sales. Overall sales increased 42% to £555 million, with organic growth of 3%. Trading profit increased 45% to £61 million, with the organic change in trading profit showing a decline of £3 million, largely due to reduced spares sales and unfavourable exchange rates in the quarter. The trading margin improved to 11.0% due to a strong performance by GKN Aerospace Engine Systems.

Automotive 

Global light vehicle production in the third quarter of around 20.0 million vehicles was 4% ahead of the comparable period in 2012 with good growth in China (+9%) and North America (+6%) and more modest growth in Europe (+2%) and Japan (+2%). Brazil (+7%) and India (+5%) continued to be volatile.

GKN Driveline

GKN Driveline's third quarter sales were 9% higher at £842 million (2012: £773 million), with organic growth well ahead of global automotive production. Trading profit increased to £58 million (2012: £42 million) and trading margin was 6.9% (2012: 5.4%).

GKN Powder Metallurgy

GKN Powder Metallurgy's third quarter sales increased 13% to £234 million (2012: £208 million), with organic sales growth of 10%, outperforming automotive production in both Europe and North America. Trading profit increased to £23 million (2012: £20 million) at a margin of 9.8% (2012: 9.6%).

GKN Land Systems

GKN Land Systems markets remained weak, particularly for construction and industrial equipment. The conclusion of some of the previously announced Structures contracts also led to a drop in sales. Agricultural equipment demand remained broadly flat.

Sales were down 4% at £208 million, including an 8% organic decline which was similar to the first half. Trading profit was £16 million and the trading margin was 7.7%, reflecting the more challenging markets and normal seasonality.

Other businesses

Sales in the quarter for GKN's other businesses increased to £26 million (2012: £19 million) due to a rebound in sales from both Cylinder Liners and Emitec as the commercial vehicle market recovered from the prior year. GKN's other businesses reported a trading profit of £2 million (2012: trading loss of £2 million).

Final Results Announcement

The Group intends to issue its 2013 full year results announcement on 25 February 2014.

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 certain subsidiary businesses sold and closed) with the Group's share of the sales and trading profit of joint ventures. References to trading margins are to 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 organic results which exclude the impact of acquisitions/ divestments as well as currency translation on the results of overseas operations.

(2) The Group has adopted the amendments to IAS 19 Employee benefits, which became effective on 1 January 2013. Consequently, the comparative information has been restated with the effect of reducing trading profit and management profit before tax by £1 million for the three months ended 30 September 2012 and by £3 million for the nine months ended 30 September 2013.

Further information:

Analysts/Investors:

Guy Stainer

Investor Relations Director

GKN plc

T: +44 (0)207 463 2382

M: +44 (0)7739 778187

E: [email protected]

Media:

Chris Fox

Group Communications Director

GKN plc

T: +44 (0)1527 533238

M: +44 (0)7920 540051

E: [email protected]

Cautionary Statement

This announcement contains forward looking statements which are made in good faith based on the information available at 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. Nothing in this document should be regarded as a profits forecast.

Notes to Editors

GKN plc is a global engineering business serving the aerospace, automotive and land systems markets. It has operations in more than 30 countries, around 50,000 employees in subsidiaries and joint ventures and had sales of £6.9 billion in the year ended 31 December 2012. GKN plc is listed on the London Stock Exchange (LSE: GKN).