GKN stuns City with 67% increase
Shares jump 51p as half-year profits beat forecasts and top pounds 162m
Friday 11 August 1995
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."
- 2 Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
Rowan Atkinson to sell £10 million McLaren 'supercar' he crashed into a tree and a lamppost
UK weather: Snow to fall in the coming week with sub-zero temperatures to last until early February
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Warriors in ancient Iraq suffered Post-Traumatic Stress Disorder more than 3,000 years ago, say researchers
US blames Russia after rocket attacks in Ukraine kill at least 30
Nigel Farage: NHS might have to be replaced by private health insurance
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
British Muslim school children suffering a backlash of abuse following Paris attacks
George Galloway condemns 'racist, Islamophobic, hypocritical rag' Charlie Hebdo at freedom of speech rally
Islamic history is full of free thinkers - but recent attempts to suppress critical thought are verging on the absurd
iJobs Money & Business
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...
£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...
£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...
£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...