On the day the government announced that new diesel and petrol cars will be banned in the UK from 2040, GKN (GKN) revealed a 5 per cent rise in organic revenue that was largely due to the performance of the Driveline division, which is gaining business on the back of the transition towards lower emission vehicles, hybrid and fully electric. Indeed, the UK engineer was one of the first movers in this space with around 400,000 of its eDrive systems delivered thus far.
Reported figures were flattered by positive currency translations, but all three divisions recorded organic sales growth. Trading at GKN Aerospace was mixed, with improved military sales set against slowing commercial activity and the trading margin tightened from 9.9 per cent to 9.3 per cent.
This contraction was partly due to increased pension costs. Overall, the group was saddled with £33m in service and administration pension costs and £24m in related interest charges during the period. That represents a sizeable drag on profits, so GKN closed its UK defined benefit pension schemes at the start of July and will pump in £250m in the second half to help address the £1bn deficit.
Jefferies expects adjusted pre-tax profit of £742m for the December 2017 year-end, giving EPS of 32.6p, compared with £678m and 31.1p in 2016.
| GKN (GKN) | ||||
| ORD PRICE: | 317.1p | MARKET VALUE: | £5.45bn | |
| TOUCH: | 317-317.4p | 12-MONTH HIGH: | 379p | LOW: 283p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 146p* | NET DEBT: | 27% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 4.24 | 182 | 9.5 | 2.95 |
| 2017 | 4.88 | 559 | 24.8 | 3.10 |
| % change | +15 | +207 | +161 | +5 |
| Ex-div: | 10 Aug | |||
| Payment: | 18 Sep | |||
| *Includes intangible assets of £1.83bn, or 107p a share | ||||
