GKN H1 profit drops but revenue boosted by acquisitions

Engineer GKN reported a drop in first-half pre-tax profit and said it expects to book a charge in the second half of the year as it looks to cut costs, although revenue was boosted by acquisitions.

For the six months ended 30 June, pre-tax profit fell 14% to £182m on sales of £4.24bn, up 17% from the same period last year. Earnings per share fell 4% to 9.5p but the company lifted its interim dividend to 2.95p per share from 2.90p.

Chief executive Nigel Stein said: “This is a good set of first half results with GKN continuing to make underlying progress in line with our expectations. Each division has continued to deliver against our strategy. GKN is in good shape with excellent technology and strong positions in the aerospace and automotive markets. Capital allocation will continue to be focussed on these divisions, with greater emphasis on internal productivity.”

The company said it was sharpening its focus on costs and directing capital expenditure more towards productivity, with cuts of £30m pencilled in for next year which will generate a charge of £35m in the second half of 2016.

Looking ahead, GKN said that despite market uncertainty following the UK’s vote to leave the European Union, there should be little impact on the company over the medium term and 2016 is expected to be another year of growth, helped by currency translation and the Fokker deal.