GKN first-quarter trading in line

Engineering group GKN reported a rise in sales in the first quarter, but a drop in the group trading margin.

In a trading update for the period ended 31 March, the company said sales rose 12% to £2.18bn, which comprised 1% organic growth, 8% acquisition growth and 3% beneficial currency translation.

The automotive businesses continued to outperform the market, while the aerospace division traded in line with the firm’s expectations against a strong comparative period.

GKN attributed the decline in the trading margin compared with last year to a reduction in Aerospace due to lower military sales, the mix of new and mature programmes and the absence of last year’s one-off benefits.

It said the inclusion of Fokker Technologies increased profit but reduced trading margin.

GKN completed the acquisition of Fokker – a specialist tier one aerospace supplier – in October of last year.

Sales in the aerospace unit rose to £767m from £589m, in line with the group’s expectations, while GKN Driveline saw sales up 7% to £976m.

It was a different picture for the Land Systems business, however, where sales fell to £181m from £187m in 2015. Organic sales dropped 6% due to continued demand weakness for agricultural equipment and the ending of a chassis contract, which was partly offset by a 3% benefit from currency translation.

GKN said the agricultural market, particularly in North America, remains soft.

Chief executive Nigel Stein said: “Our overall performance in the first quarter was in line with our expectations. With end markets delivering as forecast and customers continuing to award us good levels of new and repeat business, we expect to grow in 2016 and beyond, helped by the contribution from Fokker, whose performance and integration is on track."