GKN plc has reported record sales for its full-year 2017 results. The global engineering group’s sales were up 11% at £10,409 million, the first time the group has exceeded £10 billion. Excluding the £112 million North American Aerospace balance sheet review adjustments, operating profit (management basis) was reported to be £774 million (2016: £773 million). Including the adjustment, operating profit (management basis) across the group was £662 million, a 14% drop on the previous year.
“GKN has fantastic businesses which have grown organically above our key markets, demonstrating once again our strong positions and leading technology,” stated Anne Stevens, Chief Executive of GKN. The group’s Powder Metallurgy division, incorporating its Sinter Metals and Hoeganaes businesses, reported organic sales growth of 5% and a trading margin of 10.6% (2016: 11.4%), principally reflecting higher raw material surcharges and the division’s investment in high-end powder capability in China.
It was stated that GKN Powder Metallurgy’s trading margin is expected to show steady progression in 2018 and 2019 as it works towards achieving its 2020 target of at least 11%. Operating cash flow is expected to remain strong.
Commenting on its plans to split the Aerospace and Driveline businesses, GKN stated that it is in the process of separating operationally and that the board has determined to formally separate GKN Aerospace and GKN Driveline into two listed companies via a demerger. The aim is to complete the demerger in the middle of 2019, creating two companies able to support their share of the group’s pension liabilities. The basis on which to progress these discussions has been agreed with the UK Pension Trustees.
As previously reported, GKN plans to proceed with the sale of GKN Powder Metallurgy, and it was stated that this and other divestments are expected to be completed within 12-18 months.