GKN share price drops as currency movements weigh on profits

on Feb 24, 2015
Updated: Oct 21, 2019

Shares in GKN Plc (LON:GKN) have declined today after the blue-chip group unveiled a hefty profit drop, blaming the decline on currency movements. As of 08:38 GMT, GKN’s share price had lost 2.25 percent to stand at 377.30p, underperforming the benchmark FTSE 100 index which has inched higher this morning. The shares have lost about seven percent over the past year.

GKN, which supplies components to car and plane makers, said in a statement that its sales had increased four percent last year organically but had declined two percent following a £403 million adverse currency translation impact. GKN’s reported profit before tax plunged to £221 million from £484 million a year ago, impacted by the £232 million movement on the mark to market valuation of forward foreign exchange contracts.

GKN’s earnings per share inched one percent higher last year, while free cash flow declined to £234 million from £346 million in the prior-year period. The blue-chip group, however, increased its total dividend by six percent to 8.4p per share.
“We have continued to outperform our key markets and report good underlying financial results in spite of sterling’s strength and some end market weakness, particularly in Land Systems,” GKN’s chief executive Nigel Stein said in the statement, adding that the company expected “2015 to be another year of growth”.

GKN also noted in the statement that it was “well positioned to outperform in our large global markets” beyond 2015.
According to the Financial Times, as of February 20, the consensus forecast amongst 24 polled investment analysts covering GKN has it that the company will outperform the market. The 18 analysts offering 12-month price targets for the blue-chip group have a median target of 392.00p, with a high estimate of 500.00p and a low of 320.00p.
As of 09:08 GMT, Tuesday, 24 February, GKN plc share price is 373.40p.