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Europe proves GKN's banana skin

A weak European car market is clearly doing GKN no good, but the engineer is diversified enough to steer through the mire
October 17, 2012

A growing civil aerospace business and high demand for new cars in the US and China has helped engineer GKN offset a deteriorating European automotive market. Conditions have worsened in recent weeks, however, and order books in Europe are softening - much depends on how much further the automotive markets have to fall.

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Demand since July's interim results has been pretty much as expected - third-quarter sales rose 8 per cent to £1.6bn and trading profit improved to £114m. Still, weakness at the core Driveline business has triggered earnings downgrades of around 6 per cent. Broker Investec Securities now expects adjusted pre-tax profit of £470m this year, giving adjusted EPS of 24.3p.