New GKN (GKN) chief Anne Stevens has her work cut out convincing shareholders to reject the takeover advances of turnaround specialist Melrose Industries (MRO). The engineer sought to cover up for a disastrous 2017 by shining a light on plans to generate healthier profits and share more cash with investors. In short, Ms Stevens, who took the reins after chief executive designate Kevin Cummings was jettisoned, wants to prove that GKN is better off going it alone.
She'll certainly have trouble convincing Melrose's chairman, Christopher Miller, who said that the full-year figures are “full of long-term promises and more short-term actual misses”, and the offeror highlighted “continued poor cash management”.
Statutory pre-tax profit figures were flattered by currency movements and the omission of costly write-downs of overvalued inventory and unpaid bills in the core aerospace division. Taking both of these factors into account, profits fell 16 per cent to £572m. Aerospace and driveline once again delivered organic sales above industry averages, but GKN also faced pricing pressures and increased investment obligations as new projects replaced old ones.
Prior to these figures, Peel Hunt had forecast adjusted pre-tax profit of £730m in 2018, giving EPS of 32.1p, compared with £555m and 24.3p in 2017.
| GKN (GKN) | ||||
| ORD PRICE: | 428p | MARKET VALUE: | £7.4bn | |
| TOUCH: | 427-429p | 12-MONTH HIGH: | 449p | LOW: 280p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 148p* | NET DEBT: | 34% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 7.14 | 484 | 24.2 | 7.90 |
| 2014 | 6.98 | 221 | 10.3 | 8.40 |
| 2015 | 7.23 | 245 | 11.8 | 8.70 |
| 2016 | 8.82 | 292 | 14.1 | 8.85 |
| 2017 | 9.67 | 658 | 29.3 | 9.30 |
| % change | +10 | +125 | +108 | +5 |
| Ex-div: | 5 Apr | |||
| Payment: | 14 May | |||
| *Includes intangible assets of £1.67bn, or 97p a share | ||||
