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
Life and Style
Steve Shaw shows Kate how to get wet behind the ears and how to align her neck
healthSteven Shaw - the 'Buddha of Breaststroke' - applies Alexander Technique to the watery sport
Sport
footballShirt then goes on sale on Gumtree
Voices
Terry Sue-Patt as Benny in the BBC children’s soap ‘Grange Hill’
voicesGrace Dent on Grange Hill and Terry Sue-Patt
Arts and Entertainment
Performers drink tea at the Glastonbury festival in 2010
music
News
A poster by Durham Constabulary
news
Sport
Cameron Jerome
footballCanaries beat Boro to gain promotion to the Premier League
Arts and Entertainment
Emily McDowell Card that reads:
artCancer survivor Emily McDowell kicks back at the clichés
Arts and Entertainment
Twin Peaks stars Joan Chen, Michael Ontkean, Kyle Maclachlan and Piper Laurie
tvBadalamenti on board for third series
Life and Style
tech
Sport
Standing room only: the terraces at Villa Park in 1935
football
Sport
Ben Stokes celebrates with his team mates after bowling Brendon McCullum
sportEngland vs New Zealand report
News
Amal Clooney has joined the legal team defending 'The Hooden Men'
people
News
ebookA unique anthology of reporting and analysis of a crucial period of history
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

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine