GKN plc 2005 Interim Results Announcement

LONDON, August 4 -- As reported       As reported excluding
                                      under IFRS      items in note (1) below
                                  First First           First   First
                                  Half  Half Change     Half    Half   Change
                                   2005  2004            2005    2004
                                  GBPm  GBPm      %     GBPm    GBPm        %
    Continuing operations
          Sales                  1,859 1,777      5    1,859   1,777        5
          Trading profit (1)       115   117    (2)      115     117      (2)
          Operating profit          72    58     24      115     117      (2)
          Profit before tax         60    29    107      103      88       17
          Profit after tax          42    13    223       78      66       18
          Earnings per share - p   5.6   1.6    250     10.5     8.8       19
    Total Group
          Profit after tax          42    43    (2)       78      96     (19)
          Earnings per share - p   5.6   5.7    (2)     10.5    12.9     (19)
          Interim dividend per      4.0   3.9
          share - p

Note

(1) Figures exclude the impact of restructuring and impairment charges, profits and losses on the sale of businesses and the changes in fair value of financial instruments.

Business highlights

- Solid results despite challenging automotive markets

- Resilient Driveline performance - headline sales up 6%

- Powder Metallurgy moves back into profitability

- Excellent contribution from OffHighway Systems - sales increase 12%

- 10% increase in Aerospace sales - profits double

- CVJ manufacturing strategy now widely deployed

- Significant product and programme wins across Automotive and Aerospace

Kevin Smith, Chief Executive of GKN plc, commented:

"GKN has produced a solid set of first half results in turbulent automotive markets. Sales of continuing operations were 5% higher and subsidiaries' trading profit in the period reduced only slightly, by GBP2 million to GBP115 million, despite significant increases in raw material costs.

"All of our major businesses made progress with particularly encouraging results in Driveline and Aerospace.

"The restructuring programme in Driveline and other parts of the Group which was announced in March 2004 is well underway and on track to deliver the benefits originally anticipated.

"Significant product and programme wins across Automotive and Aerospace provide a firm foundation for future growth."

Outlook

Overall, the outlook for the remainder of the year in our major markets remains unchanged from the February and May statements.

Automotive production forecasts for North America and Western Europe have softened slightly but demand in emerging markets remains robust with China expected to return to growth.

Aerospace markets continue to be strong and the OffHighway sector also looks steady.

Global raw material prices will continue to be a major influence on the performance of the Group's Automotive businesses. Recent decreases in steel surcharges have been encouraging although the cost of other raw materials and energy continues to be high.

For Automotive we expect an improving level of performance allowing for the inherent seasonality in automotive production between the first and second halves of the year. The strategic restructuring programme will continue as planned.

Aerospace and OffHighway are expected to continue to show good levels of performance.

Based on the Group's first half result and in light of the factors above, we see no reason at this stage for changing our expectations for the Group's trading performance for the year.

The full text of the Chairman and Chief Executive's Statement which will appear in the Interim Report together with Financial Statements and notes thereon can be downloaded from www.gkn.com

GKN Corporate Communications, Tel: +44-207-463-2354