GKN plc results for the six months ended 30 June 2014 showed strong performance figures for the group’s Powder Metallurgy Division, the world’s largest manufacturer of sintered components. GKN Powder Metallurgy comprises GKN Sinter Metals and Hoeganaes. Hoeganaes produces the metal powder that GKN Sinter Metals and other customers use to manufacture precision automotive components for engines, transmissions and body and chassis applications. GKN Sinter Metals also produces a range of components for industrial and consumer applications.
GKN Powder Metallurgy sales for the six month period to 30 June were £471 million. The strong organic sales increase of £26 million (6%) was, states GKN, more than offset by the £35 million (8%) adverse impact of currency translation. Strong growth was achieved in North America and China whereas growth in Europe was more in line with vehicle production. Sales in South America fell due to weaker automotive markets. Around 80% of GKN Powder Metallurgy sales are also to the automotive market, with the balance to other industrial customers.
The organic increase in profit was £9 million, including £5 million of restructuring charges reported in 2013, which was partially offset by the £4 million negative impact of currency translation. The divisional trading margin was 11.3% (2013: 10.0%, or 11.0% excluding restructuring charges). Return on average invested capital was 21.0% (2013: 19.2%).
“We have continued to outperform our key markets and report good underlying financial results in spite of sterling’s strength and some end market weakness – we expect these trends to be maintained in the second half. GKN is continuing to make encouraging progress against its strategy,” stated Nigel Stein, Chief Executive, GKN plc.
GKN Powder Metallurgy continued its strong product and operational development in engines and transmissions, being awarded more than £75 million of annualised sales in new business. It also won a number of quality awards including Paccar’s “Quality Achievement Award 2013”, Schaeffler’s “Best Technical Cooperation” and Nexteer’s “Perfect Quality 2013” award.
Looking to the future GKN stated that in the automotive sector external forecasts suggest that global light vehicle production should grow around 3% in the second half of 2014. Increases are expected in China, North America and India, while Europe is forecast to be flat and Japan and Brazil decreasing. Against this background, GKN Driveline and GKN Powder Metallurgy are expected to continue to grow organically above the market.
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