GKN pays $200m for two firms to strengthen US position

GKN, the automotive components and aerospace group, strengthened its position in the US yesterday, paying about $200m (£110m) to acquire two companies. The group, which still has some £400m left over from the £1bn sale of its half stake in the helicopter maker AgustaWestland, has bought Rockford Powertrain, which makes driveshafts for the construction industry, and an aerospace firm Stellex Aerostructures. Together the two companies will bring in about $200m of additional revenues. Analysts estimate GKN paid about one times sales for the businesses.

The two acquisitions came as GKN reported a 9 per cent rise in underlying first-half profits to £112m, towards the top end of forecasts - driven by strong demand for civil aircraft and a return to profitability for the company's US sinter metals business.

But GKN said it expected raw material costs to be £5m-£6m higher in the second half, while its energy bill would increase by £5m.

Kevin Smith, who is overseeing a move to relocate more of GKN's manufacturing capacity to low labour cost countries, said he expected the group's Chinese workforce to triple to 6,000 in the next four to five years.