GKN share price: Aerospace unit in $5m deal with General Atomics

The aerospace unit GKN plc (LON:GKN) has signed a $5 million (£3 million) long-term deal with US-based General Atomics Aeronautical Systems Inc for the continued supply of fuel bladder systems for Predator drones.

GKN’s share price was up 0.05 percent at 389p as of 13:22 UTC, valuing the UK-based global automotive and aerospace engineering group at £6.38 billion.

GKN Aerospace said in a statement last week it had so far delivered more than 75 sets of the ‘fit and forget’ fuel bladder systems for the unmanned aircraft. Initial production of the Predator fuel bladders was conducted at GKN’s facility in Portsmouth before it was transferred to the company’s US plant in Alabama.

Under the new contract, GKN Aerospace will supply a further 100 fuel bladder systems to General Atomics in 2014.
According to Ron Kato, vice president and managing director of GKN’s Special Products Group, the Predator programme uses in full all of GKN’s recent advances in both manufacturing and materials.

The fuel bladders with complex shapes are manufactured using GKN’s new vacuum forming process and its latest polyurethane material to fit into all available space on the Predator airframe, maximising the fuel load capacity and the endurance of the unmanned aircraft.

GKN funds research on emissions-cutting solutions for aero engines

In an unrelated development, GKN Aerospace will invest €2 million (£1.66 million) in the G5Demo project, part of the Swedish Green Aerospace Demonstrator programme. The investment will be matched by an equivalent amount of funding over two years from Vinnova, the Swedish government agency for innovative systems, it was announced last month.

The GKN-led G5Demo is an engine demonstrator programme focused on new technological solutions that will help reduce by half carbon dioxide emissions from aeroplane engines by 2020. The Green Aerospace Demonstrator programme encourages the participation of Swedish industry and research firms in international projects aimed at providing solutions for more environment-friendly air transport products .

GKN Aerospace’s contribution will be to introduce innovative manufacturing technologies and advanced materials to G5Demo, allowing the creation of lightweight, state-of-the-art engine structures that can then be incorporated in the full-sized aircraft engines that form the project demonstrators.

In 2012, GKN acquired Volvo Aero – the aircraft engine division of Sweden’s Volvo – to bolster its aerospace division. According to Hargreaves Lansdown, the division, now renamed GKN Aerospace Engine Systems, looks set to profit from an expected rise in demand for commercial aircraft.

A second Swedish facility of GKN is Aerospace Applied Composites, in Linköping, which manufactures a wide range of products, including missile components, pressure vessels and components for aerospace engines.

Analysts on GKN

Canaccord Genuity initiated coverage on shares of GKN with a “buy” rating and a 500p price target on Monday. The same day Numis Securities maintained their “buy” rating. The broker has a 467p price target.

GKN’s stock has a consensus rating of “buy” and an average price target of 363.76p from a total of 21 analysts. Fourteen of them have rated the shares as a “buy” and seven have assigned a “hold” rating.

As of 13:21 UTC buy GKN shares at 389.20p.
As of 13:21 UTC sell GKN shares at 389.00p.