Resilient GKN shrugs off fears that a strong pound could hit exports as it reports profit rise
Shares accelerated in GKN, whose products help drive the wheels of hundreds of millions of cars worldwide, despite worries over the effects of the strong pound on its export sales.
The Birmingham-based engineering group was high on the FTSE 100 leader board after it reported a 6 per cent increase in pre-tax profits to £296million for the first half of this year.
The interim dividend was raised by 8 per cent to 2.8 per cent.
Investment: Chancellor George Osborne is banking on innovations from major manufacturers like GKN to drive the economic recovery
Success: The company is one of the UK's unsung industrial heroes, having seen profits rise
Chancellor George Osborne is banking on innovations from major manufacturers like GKN to drive the economic recovery.
The company is one of the UK’s unsung industrial heroes, having seen profits rise from £87million in 2009 to £578million for 20134.
Among its recent deals is a tie up announced yesterday with Go-Ahead Group to use Formula One technology to help London buses use fuel more efficiently.
But along with other manufacturing exporters, GKN faces big challenges due to the strength of sterling against other major currencies including the US dollar and the euro.
Sales were 1 per cent lower at £3.8billion after the impact of £247million in currency translation, but would have been up 6 per cent otherwise.
The company said the pound took £24million off its profits in the period. Over recent weeks, the shares have suffered a sharp reverse over fears that the strength of sterling would quell growth.
But the shares (up 22.9p to 366p) have bounced back to top the FTSE 100 risers, as it became clear the worries were overdone.
Nigel Stein, the chief executive, said he expects GKN to continue to post good results despite the vagaries of the forex market.
The Driveline business, which sells to auto-manufacturers, saw sales rise 11 per cent to £1.8billion.
The Aerospace arm grew sales by 3 per cent and Powder Metallurgy was up 6 per cent.
The Land Systems operation, which supplies components for vehicles in the farming and mining sectors, saw sales drop 9 per cent.
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