GKN stuns City with 67% increase

Shares jump 51p as half-year profits beat forecasts and top pounds 162m

GKN, the car components to helicopters group, stunned the City yesterday with half-year profits far above expectations. Analysts hastily raised their forecasts for the full year after the company reported a 67 per cent rise in pre-tax profit to pounds 162.6m.

GKN's shares jumped 51p to 783p as the chairman, Sir David Lees, predicted that the remainder of the year would see further financial progress.

"These were good figures everywhere," said Harry Philips, an analyst at Panmure Gordon, who pencilled in full-year profits of pounds 305m to pounds 310m, up from pounds 274m.

GKN's automotive and agritechnical operations contributed pounds 106m of profit, up 68 per cent. Industrial services saw a 17 per cent rise to pounds 27m, while the special-vehicles division made pounds 23m, up 15 per cent.

The company saw recovery in its European and North American markets, though it warned of a slight downturn in the automotive businesses. It expects car production in mainland Europe to fall 2 to 2.5 per cent in the second half of 1995, reversing the first half's increase. "In continental Europe production was up about 9 per cent in the first half, and we don't see that continuing in the second," finance director David Turner, said.

Analysts said the downturn would not significantly hinder performance, and would probably be offset by growth in other businesses.

GKN, which has consolidated its Westland helicopters operation from the start of this year, said it saw profitability rising in aerospace and military vehicles. And at Chep, the pallets business where it has a share in a joint venture, it forecasts strong US growth, which will help its shift away from the cyclical automotive industry.

Sir David said the group's defence and business-services arms would grow faster than automotive this year and for several to come. "The approximate proportions as of the end of this year will be about 60 per cent for automotive and about 20 per cent for the other two," he said. "Their growth potential is such that the group will change to nearer 50:25:25."

Analysts were impressed by margin growth achieved in the automotive businesses. "Not only did automotive margins perform better than the 1994 first half, they even outperformed second half 1994, and that was really good," said Charles Armitage of Lehman Brothers.

Another analyst said: "In the short term, production cost improvements and growing volumes are the factors pushing margins up, and GKN will only be exposed when one or both fall away. I think that will be some way off."

GKN lifted its interim dividend to 8.75p, compared with 8p previously. Estimates had ranged from 8p to 8.8p, and analysts said the modest rise was because GKN was building up dividend cover.

Mr Philips said: "It is now quite clear that the base profit of the company is substantial - from which they can sustain a decent dividend policy."

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
News
ebooksNow available in paperback
Life and Style
tech
News
The 67P/CG comet as seen from the Philae lander
scienceThe most important scientific breakthroughs of 2014
Arts and Entertainment
Ian McKellen as Gandalf in The Hobbit: The Battle Of The Five Armies
film
Arts and Entertainment
Sarah Koenig, creator of popular podcast Serial, which is to be broadcast by the BBC
tvReview: The secret to the programme's success is that it allows its audience to play detective
News
Ruby Wax has previously written about her mental health problems in her book Sane New World
people
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

Ashdown Group: Marketing Services Manager - (communications, testing, DM)

£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas