13th Dec 2007 07:00
GKN plc Trading Update 13 December 2007
GKN plc today issues an update on progress in 2007 ahead of its financial year end on 31 December.
The Group's preliminary announcement of its 2007 results will be on 28 February 2008.
Overall market conditions in the second half of the year have been much as anticipated at the time of the Interim Results announcement in August. Whilst car and light vehicle production in North America is currently forecast to be fractionally lower than expected, Western Europe, China and India are all slightly higher. Agricultural markets in Europe and North America have remained firm and, although US light construction demand has eased, the mining and heavy construction sectors have remained sound. Demand continues to be strong in both civil and military Aerospace markets.
Group trading profit for the eleven months to November shows a solid improvement over the same period last year with Driveline, Aerospace and OffHighway all ahead. In Powder Metallurgy, the second half has been impacted by higher raw material costs and some operational disruption from the completion of restructuring activity so that year to date performance is marginally below 2006.
The further weakening of the US dollar has been partially offset by the recent strengthening of the Euro and other currencies. The adverse translational impact of currency in the second half is anticipated to be lower than the ‚£5 million reported in the six months to June.
Overall, the anticipated out-turn of Group profit before financing costs and tax* is in line with the current market consensus.
As previously indicated, financing costs for the second half of the year are likely to be at a similar level to the ‚£24 million charged in the first half, having completed the Teleflex acquisition on 29th June. The tax rate in the second half is also likely to be similar to the first half figure of 3%.
Our strategic restructuring programme remains on track for completion around the end of the year and we will enter 2008 with strong order books in all our major businesses. Whilst economic conditions in some markets are uncertain, the strength of our order book gives us confidence that 2008 will be another year of solid progress for GKN.
* Profit before financing costs, tax, restructuring and impairment charges, amortisation of non-operating intangibles arising on business combinations, profits and losses on closure of businesses and changes in the fair value of derivative financial instruments.
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