UK parts supplier GKN posts 19% increase in first-quarter profit

Article by Christian A., on April 19, 2012

GKN, a UK-based parts supplier, recorded a 19% increase in profit during the first quarter of the year, thanks to the acquisitions made in 2011 and the strong performance from its automotive business. On Wednesday, GKN posted a first-quarter trading profit of 142 million pounds or $226.2 million on revenues 17% higher at 1.74 billion pounds.

The company also reported a 28% increase in profits at its autos unit, thanks to the contribution of Getrag Driveline Products business, which it acquired in 2011, and to the strong growth in premium vehicle sales. The division manufactures axles, chassis, driveshafts, light vehicle components and other related products.

GKN's largest customers, including Volkswagen, Audi and BMW, are anticipating the demand for high-end automobiles to carry on this year, especially in China. Moreover, the company revealed that its aerospace unit achieved a 13% increase in profit during the period, thanks to the ramp-up of several civil aerospace programs that offset sliding military sales. This division manufactures airframes for plane manufacturers Boeing and Airbus.

Analysts anticipate that in the long term, GKN will benefit from Boeing's new 787, a product that the parts supplier is heavily involved in. Deliveries for the 787 have already begun.

Production of the Airbus A350 has also started. Furthermore, GKN revealed that its land systems unit also performed well, aided by the acquisition of component maker Stromag in 2011. The division manufactures agricultural and construction equipment. GKN shares have increased 9% so far for 2012. They closed at 211.50 pence on Tuesday, valuing the company at about 3.2 billion pounds.

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