GKN plc has reported its results for the year ended 31 December 2016, showing sales for the whole group increased by 22%, to £9,414 million, with organic sales increasing £209 million (up 2%). Trading profit was up 14% to £773 million. The group’s Powder Metallurgy division reported growth in sales of 14% to £1,032 million, however organic sales were flat, following the £11 million pass through to customers of lower steel prices and other surcharges.
“This is a good set of results with GKN continuing to make underlying progress in line with our expectations. We performed well against our key markets, overcoming some demand weakness and demonstrating once again the strength of our businesses, strong market positions and leading technology. Strategically we made good progress, including smoothly integrating Fokker and completing the disposal of Stromag – evidence of our sharper focus on capital allocation towards Aerospace and Automotive markets,” stated Nigel Stein, Chief Executive of GKN.
The GKN Powder Metallurgy division comprises GKN Sinter Metals and Hoeganaes. GKN Sinter Metals is the world’s leading manufacturer of precision automotive sintered components as well as components for industrial and consumer applications. Hoeganaes is one of the world’s leading manufacturers of metal powder, the essential raw material for Powder Metallurgy.
Underlying growth (before raw material pass through) was reported to be 1%, lower than global light vehicle production which was up 5%, due to under-representation in the strong China market. Underlying sales growth above the market was achieved in China, Europe and Brazil but sales in North America fell slightly due to weaker demand from the division’s largest automotive customer.
The organic reduction in trading profit was £4 million, including a £3m restructuring charge as part of the Group-wide programme. There was a £2 million reduction from start-up losses in the new powder business acquired in China and the gain from currency translation was £15 million.
During the year, GKN Powder Metallurgy achieved a number of important milestones, which included winning around £200 million of annualised sales in new and replacement business. The division commenced production of high quality automotive grade powders in China for the Asian market and formed a new business to manufacture titanium powders in North America for Additive Manufacturing (AM) applications. At its Radevormwald, Germany, facility the company installed the first multi powder bed AM machine in the automotive industry to enable series production of designed for AM precision parts for engines and transmissions.
“We expect 2017 to be another year of further growth, helped by the benefits of the actions taken in 2016 and GKN’s constant focus on continuous improvement,” added Stein.