GKN profits up but talks on helicopter link drag on

THE LONG-AWAITED restructuring of the European defence industry will have to wait a little longer.

The defence group GKN is still in talks with Agusta Helicopters of Italy to create the second-largest helicopter group in the world. Chief executive CK Chow is confident that there will be an agreement by the beginning of next year. "We have not negotiated the alliance yet, but we have strong common agreement on a number of issues," he said.

When the deal is done GKN, which has recently signed a deal with its partners ARGE of Germany and Giat Industries of France to make battlefield "taxis" for European armies, will become a significant player in Europe.

"It is inevitable that the defence industry will be radically changedover the next few years. And we will be in a very powerful position to take an active role in the industry," said Mr Chow, who was speaking yesterday as GKN pleased the City with a sparkling set of interim results.

The slowdown and the strong pound, which has so ravaged the manufacturing sector, have had a minimal impact on GKN.

Mr Chow is keen to point out that GKN is a global engineering group and is not as exposed as many UK engineering companies, which are at the mercy of the strong pound.

Even the Asian crisis has not made a dent on the group's profits. Its exposure to the Asian market is small, and it is taking advantage of the turmoil to strengthen its presence there - GKN has now bought 100 per cent of its Automotive Driveline businesses in Korea and Thailand.

The helicopter-to-tanks group, which also earns significant money in waste management, announced a 13 per cent rise in profits to pounds 230m in the six months to 30 June. Shares fell by just 23p to 748p on a day of sharp falls in the market overall.

GKN's balance sheet is strong, with cash reserves of pounds 261m. The company is capable of launching a pounds 1bn bid, but there will not be one on that scale this year: growth is more likely to be organic, with takeovers in the region of pounds 50m to pounds 100m, said Mr Chow.

Despite the problems at Rover and a two-month strike at General Motors, the company's largest customer in the US, the automotive and agritechnical division was the star performer. The GM strike is likely to have cost GKN around pounds 600,000 in sales, but a good performance in Mexico will more than compensate.

Profits jumped by pounds 27m to pounds 133m on sales up 11.5 per cent to pounds 1.1bn. Sales and profits fell in the Aerospace and Special Vehicles division, but this was due to the completion last year of a contract for Desert Warrior armoured vehicles for Kuwait.

In the long term, the winning of the MRAV (multi-role armoured vehicle) contract for the British, German and French governments is far more significant. So far 600 orders for these "battlefield taxis" have been received, but GKN believes there is a market for 7,000 vehicles.

The group's other strong performer was its industrial services division, which saw sales up 22.6 per cent to pounds 255m.

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Ashdown Group: Marketing Executive - 6 month FTC - Central London

£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

Ashdown Group: Junior Project Manager (website, web application) - Agile

£215 per day: Ashdown Group: Junior Project Manager (website, web application ...

Guru Careers: Software Engineer / Software Developer

£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before