GKN plc 2005 Preliminary Results Announcement
LONDON, February 28 --
As reported As reported excluding
under IFRS items in note (1) below
2005 2004 Change 2005 2004 Change
GBPm GBPm GBPm GBPm GBPm
Continuing operations
Sales 3,648 3,481 167 3,648 3,481 5%
Trading profit(1) 228 214 14 228 214 7%
Operating 98 (24) 122 228 214 7%
profit/(loss)
Share of joint 10 16 (6) 10 16 (38)%
ventures (post-tax)
Net financing costs(2) (35) (75) 40 (35) (75) n/a
Profit/(loss) before 73 (83) 156 203 155 31%
tax (2)
Profit/(loss) after 59 (115) 174 163 110 48%
tax (2)
Earnings per share - p 7.7 (16.1) 23.8 22.1 14.6 51%
Total Group
Profit after tax 59 772 (713) 163 172 (5)%
Earnings per share - p 7.7 105.0 (97.3) 22.1 23.1 (4)%
2005 2004 Change
p p %
Dividend
Proposed full year dividend 12.2 11.9 2.5
per share
Notes
(1) Figures exclude the impact of restructuring and impairment charges, profits on the sale of businesses and changes in the fair value of derivative financial instruments.
(2) Comparison with 2004 is made difficult because of the treatment of AgustaWestland as a discontinued activity following its disposal at the end of November 2004, with a consequent benefit to the net financing costs of continuing operations in 2005.
Business highlights
- Sales of continuing businesses up 5%; trading profit up 7%
- Aerospace delivers 10% increase in sales, 42% increase in trading profit
- Automotive slightly down as cost pressures offset acquisition benefits
- Robust performance from Driveline
- Powder Metallurgy makes progress
- OffHighway increases sales by 8% and trading profit by 11%
- First major breakthrough in CVJ technology for 70 years
- Strong balance sheet and benefits of restructuring provide a platform for growth
Kevin Smith, Chief Executive of GKN plc (LSE: GKN), commented:
"During 2005 we made rapid progress in the delivery of those strategic actions which are building a robust platform for GKN's future growth.
"The execution of our Group restructuring programme, which is increasing our presence in high growth low cost economies, reached a peak of activity in 2005 and will be very close to completion by the end of 2006. The performance benefits of this programme will be considerable.
"For GKN, 2005 has been characterised by a robust performance from our Driveline business, a solid recovery by Powder Metallurgy and continued strong results from both our OffHighway and Aerospace business.
"Across all our businesses we launched important new products, some of which represent a considerable breakthrough in product and process technology. All of them will help fuel GKN's future growth.
"We are keen to normalise the funding position on our UK pension scheme. We have decided therefore to make an immediate contribution of GBP200 million into the fund. This payment will significantly reduce both the current deficit and future annual contributions to the scheme.
"Overall the Group's balance sheet remains strong and well capable of supporting our growth ambitions."
2006 Outlook
There is a broadly stable outlook for major Automotive markets whilst Aerospace markets look set to remain strong.
In Automotive, industry forecasts for North American and Western European markets are for little change in production volumes, although there remains some risk of disruption to the former following recent supplier insolvencies. However, developing markets, especially in Asia Pacific, are expected to show continuing strong growth.
Prices for steel and other automotive raw materials appear to have stabilised although energy costs are still showing some increase.
With its presence in emerging markets and strategic restructuring programme nearing completion, Driveline should have another solid year. Powder Metallurgy expects to show further recovery and growth. Results for our other smaller automotive businesses will be impacted by redundancy costs.
OffHighway's agricultural markets softened slightly during 2005 but are expected to remain around current levels throughout 2006, with continuing strong demand in construction markets. We expect our business to continue to make good progress.
Aerospace markets will remain strong and we expect to continue to improve performance albeit at a lower rate of growth than the exceptional rate seen in 2005.
Interest costs on borrowings will rise in 2006 as increases in US interest rates will impact foreign currency borrowings by around GBP9 million.
Overall we expect to continue the progress seen last year into 2006, with the further benefits of restructuring together with the strength of our order book accelerating growth from 2007 onwards.
The full text of the business review which will appear in the annual report and accounts together with financial statements and selected notes may be downloaded from www.gkn.com.
GKN Corporate Communications, Tel:+44-(0)20-7463-2354