The joint-venture with the Chinese government, involving the company in making vehicle driveshafts, will be GKN's first in the People's Republic since the late Eighties. Sir David Lees, the chairman, said detailed work on the project had already been done.
The move will be funded from GKN's growing cash-pile, which expanded by pounds 30m in the first six months of the year to pounds 252m. Sir David said the group's transformation since he took the helm eight years ago was now complete: "We've come to the end of the divestments, we are now looking at further investment opportunities."
Two other markets, in Thailand and countries in the former Soviet block, are also under scrutiny, though Sir David said there were no firm plans to make acquisitions or investments. Overall, capital spending rose from pounds 10m to pounds 62m in the first half of the year. The increase in profits was fuelled by Westland, the helicopter firm taken over in a hostile bid battle in 1994. Half-yearly earnings in aerospace and the defence business jumped from pounds 23m to pounds 38m. Sir David said Westland had a "good order book" stretching until 2003.
Profits from industrial services, which included Chep pallet hire and the Cleanaway waste management company, rose from pounds 26m to pounds 37m. Chep bought another 9 million pallets in the first half of the year, increasing its stock by a fifth. But the gloss was taken off the figures by the car components businesses, which continued to be hit by depressed demand, particularly in Europe. Profits fell slightly, from pounds 102m to pounds 101m. Sir David said: "The environment for car components manufacturers at the moment is not very encouraging."
He predicted car production in the UK would pick up by 10 per cent in the second half of this year, and would also improve in the US, though there was little sign of any increase in demand on the continent.
GKN said its recently-completed constant velocity joint factory in Italy, which will supply the entire Fiat car range, had been hit by start-up costs which had reduced profits compared with the first half of 1995.
CK Chow takes over as chief executive in the new year when Sir David's role as chairman and chief executive will be split. Dismissing suggestions that he would continue to exercise real control, Sir David, who will continue as non-executive chairman, explained: "We are both very determined that the situation will work well. CK will be absolutely and fully responsible for management of the company. My role will be essentially to manage the board."
Sitting alongside Sir David, Mr Chow agreed: "The overriding principle is that I will manage the company," he said. He did not expect to make "revolutionary" changes, though he said he was determined to seek faster growth through overseas expansion.Reuse content