In an interim management statement, GKN Plc announced that the group had continued to make strong progress through the third quarter 2010 and expect a solid close to the year.
Group sales in the three months ended 30 September 2010 totalled £1,336 million, a 21% increase over the comparable period in 2009. Favourable currency translation and acquisitions increased sales by £40 million and therefore underlying sales increased by 17%.
Growth in Powder Metallurgy
In the automotive sectors, including the group’s powder metallurgy business, overall demand during the third quarter remained at similar levels to the second quarter, with the European seasonal decline less than normal and strong demand in North America and Asia. Sales increased by 34% compared with last year, to £800 million (2009: £598 million), up 28% on an underlying basis.
Overall, Automotive trading margin was 6.9%, with Powder Metallurgy trading margin at 7.9% and Driveline at 6.6%. Driveline’s profits were held back somewhat during the quarter as a result of additional temporary labour costs in Europe to meet higher than expected customer demand during the holiday season and increased raw material costs which should largely be recovered over coming months.
Aerospace & Land Systems
Aerospace markets continued to perform broadly in line with expectations although the seasonal decline in third quarter sales in Europe proved somewhat greater than normal. Third quarter sales in this sector were down 3% on last year at £349 million (2009: £361 million) and down 7% on an underlying basis. Trading profit was £39 million (2009: £43 million) and the trading margin was 11.2%.
The markets for Land Systems returned to normal third quarter seasonal patterns and GKN sales were 11% lower than the second quarter. However, compared with last year, Land Systems’ third quarter sales were up 30% at £165 million (2009: £127 million) with trading profit of £8 million (2009: trading loss of £3 million) and a trading margin of 4.8%.
Positive outlook for PM Business
GKN state that the outlook in the fourth quarter remains positive with Group sales expected to be at a similar level to the third quarter. Production schedules support another solid quarter for the Driveline and Powder Metallurgy businesses, with Land Systems sales expected to be flat and Aerospace expected to have strong fourth quarter sales.