GKN expects its business to continue to be hit by the earthquake in Japan

Article by Christian A., on April 11, 2011

British industrial group GKN anticipates that its automobile business will continue to feel the effects of the March 11 Japan earthquake in the short term, the company’s chief executive officer, Kevin Smith, stated on Monday. However, such adverse effect on the auto business would be partially offset by the growth of the company’s other divisions.

The earthquake disrupted the company’s complex supply chain in Japan. Due to the massive damage that the earthquake caused, the country’s biggest automobile companies such as Toyota Motor Corp., and Nissan Motor Co., suspended production at their facilities.

The disruption also affected the manufacturers abroad, especially those in Europe and North America, as the component supply problems from Japan halted or reduced their production in their factories.

According to Smith, the Japanese Original Equipment Manufacturers (OEMs) are contemplating on resuming volume production by April and May.

It may take some time before the industry can make up for on the production losses through the first half of the year. GKN reported a 51 percent increase in pretax profit to 107 million pounds ($175 million) during its first quarter in 2011.

The company’s strong performance in its powder metallurgy division contributed largely to the increase in profit. Aside from auto parts, the company also produces airframes for Boeing and Airbus.

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