GKN lifted higher by aerospace division

GKN aerospace reported sales of £3.4bn through last year, a 37 per cent increase year on year, including a £769m contribution from Dutch aircraft manufacturer Fokker Technologies in the first full year of ownership. There were concerns that a slowdown in the production of wide-body jets would impact performance, but both Airbus and Boeing have stepped up production of their next-generation models. The industry outlook on the civil aviation market is positive through to the end of next year, so shareholders can realistically expect further progress. And although organic sales growth in commercial aerospace was partly offset by a decline in military work, GKN's chief executive, Nigel Stein, envisages "increased activity" in that segment through 2017.

The improvement in sales of auto parts was supported by a strengthening performance in Europe, where the group gained market share through demand from the likes of Fiat Chrysler, Volvo and Daimler. Global light vehicle production was on the rise at GKN's driveline division, which looks well placed to benefit from the accelerated rollout of drive-train systems for hybrid and electric vehicles. By contrast, organic sales pulled back at the group's land systems unit as a consequence of challenging agricultural and construction equipment markets. This unit has now been split into other divisions in a restructuring plan announced earlier this year.

Broker Numis expects adjusted pre-tax profit of £740m in 2017, giving EPS of 34.1p, compared with £641m and 31.0p in 2016.