GKN share price: Company issues trading update

GKN Plc (LON:GKN) has issued a trading update this morning. Investors have reacted positively to the company’s release, with GKN’s share price having jumped more than one percent in today’s session, outperforming the FTSE 100 index.

**Highlights from GKN’s statement:**
The Group’s principal markets have performed in line with the expectations set out in our February results announcement. Our Automotive businesses continue to outperform the market and our Aerospace business has traded in line with our expectations. Land Systems’ principal market remains tough.
Management sales for the three months ended 31 March 2015 were £1,943 million (2014: £1,915 million). This represented a 1% organic increase, with beneficial currency translation being broadly offset by disposals. The strengthening of the US$ versus £ sterling has had a positive impact on these results, especially in Aerospace but the weakening of the Euro has had a negative impact, particularly in Driveline and Land Systems. Group trading margin is slightly ahead of last year benefitting from currency, in spite of a decline in Land Systems. Operating cash generation is lower than the equivalent period last year because of the timing of investment programmes to support growth.
Divisional Performance
GKN Aerospace
GKN Aerospace sales in the first quarter of £589 million (2014: £546 million) were in line with expectations being slightly up on an organic basis. The planned ramp-up of production of new aircraft is helping commercial sales while military demand is marginally down. Recently announced cuts in production rates of the A330 will be a headwind in the second half of the year. Margins are ahead of the same period last year.
GKN Driveline
GKN Driveline delivered a good first quarter result with sales increasing 3% to £912 million (2014: £885 million). Organic sales increased 4%, against a very strong comparator period in 2014 and global industry production rates only 1% higher over the period. Good organic growth was achieved in Europe and China while Brazil and Japan were weak. Our North American sales were flat due to the greater weighting towards cars/SUVs and the lower content in the pick-up truck segment, which has been strong. GKN Driveline margins were similar to last year’s equivalent period although pricing remains a downward pressure.
GKN Powder Metallurgy
GKN Powder Metallurgy produced a strong first quarter, with sales up to £244 million (2014: £237 million). Organic sales growth was 3%, despite the negative impact on powder sales of a direct pass through of lower raw material prices. Powder Metallurgy margins were a little higher than those achieved over the comparable period last year. During the period, operations in Argentina were sold.
GKN Land Systems
GKN Land Systems sales declined to £187 million (2014: £217 million) including a 10% organic decline due to continued demand weakness for agricultural equipment and a 4% fall due to adverse currency translation. The Agricultural market, particularly in North America, remains soft and we do not anticipate any improvement in this market in 2015. We are mid-way through the previously announced restructuring programme.
Other businesses
Sales in the quarter for GKN’s other businesses fell to £11 million (2014: £30 million) reflecting the disposal in 2014 of the Group’s share of the Emitec joint venture.
As of 07:30 BST, Wednesday, 06 May, GKN plc share price is 348.00p.