The engineering giant posts strong first-half results.
GKN (LSE: GKN) reported pre-tax profits up 43% this morning, up £87m to £289m, driven significantly by a 29% headline rise in trading profit in its world-leading Driveline division. Strong gains were also posted by its Land Systems division, where headline profits were up 33% to £52m, and its Powder Metallurgy operation, up 21% to £47.
Group sales were up 16%, with a positive free cash flow of £28 million (up 12% on 2011), and earnings per share rose 22% to 14.4p per share.
The better-than-expected results allowed chief executive Nigel Stein to confirm an anticipated 20% hike in its interim dividend:
"GKN has continued to make good progress both in terms of financial performance and implementing our strategy to build a global market-leading business. First half trading has seen sales increases and margin progression for each of our four Divisions and our new acquisitions, Stromag and Getrag Driveline Products, are performing well.
"As a result of the strong performance and confidence in the future, the Board has decided to increase the interim dividend by 20% to 2.4 pence per share.
"The macroeconomic environment continues to be uncertain, with increasing headwinds in European auto markets. However, with the benefit of a good first half and the Group's broad exposure to global markets, our expectations for 2012 remain unchanged. We expect 2012 to be another good year of progress for GKN and, in addition, we look forward to welcoming our new acquisition, Volvo Aero, into GKN when the transaction completes in the next few months."
With full-year forecasts expected to be met, and a rising dividend, GKN may well now prove an attractive proposition to Foolish investors.
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> Jon Wallis doesn't own shares in GKN.