GKN reports first quarter loss
May 7, 2009
Component producer GKN PLC, which includes the Powder Metallurgy (PM) and Metal Injection Moulding (MIM) division GKN Sinter Metals, has reported that Group sales in the three months ended 31 March 2009 totalled £1,085 million, an 8% decrease on the first quarter of 2008. Currency translation and the Filton acquisition provided a benefit of £389 million. Excluding the Filton aerospace operation, Group sales at constant currency reduced by 33%.
In the quarter, the Group incurred a trading loss of £13 million and a loss before tax of £29 million. The Group returned to profitability in March after what was described as “a particularly difficult first two months in the automotive sector”.
GKN’s Automotive sales at constant currency, including its PM operations, were down 49% in the first two months of the year and 36% in March. Sales to Chrysler and General Motors in North America amounted to some £8 million in March and GKN has applied to join the supplier payment guarantee scheme with both companies.
In an interim statement, that Group stated “In extremely challenging automotive and offhighway markets and with a strong contribution from Aerospace, GKN has continued to make good progress in re-adjusting its operations to the current market environment.”
Global car production has been severely depressed in the first quarter, with volumes down around 35% compared with 2008. OEMs have implemented a drive to reduce inventory of vehicles and components. Government incentives to encourage vehicle sales have been implemented in a number of countries, mainly directed at the small car segment and most notably in Western Europe and China.
“Considerable uncertainty remains in GKN’s end markets. Global light vehicle production is likely to increase during the second quarter as sales and production start to re-align. We expect Offhighway markets to remain weak, with agricultural, mining and construction equipment demand down between 30 and 40% until at least the half year. Against this background and with the increasing benefits of restructuring, Driveline and Powder Metallurgy are expected to continue to make progress in the second quarter and Aerospace will continue to perform strongly”, stated GKN.
A restructuring plan announced in February was accelerated with around 1,800 people leaving the Group during the quarter.