GKN plc Reports Fall In Profits And Earnings

But GKN plc (LON:GKN) is still trouncing the FTSE 100 over the past five years.

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gknThe share price of GKN (LSE: GKN) — the multinational automotive and aerospace components company — has fallen 3.3% in early trading, following annual results for the year ending 31 December 2013.

Whilst sales increased 10%, reported operating profit was down 10%, reported pre-tax profit slumped 15% and reported earnings per share fell 17%, compared to the previous year.  The fall in reported pre-tax profit was attributed mainly a smaller gain on the mark-to-market of foreign exchange hedging contracts than in 2012. 

However, when looked at on a management basis — which aggregates the sales and trading profit of subsidiaries (excluding certain subsidiary businesses sold and closed) with the group’s share of the sales and trading profit of joint ventures, and, the company says, better reflects the performance of continuing businesses — operating profit increased 20%, pre-tax profit rose 17% and earnings per share grew by 9%. 

Overall, the company reported strong organic growth in its automotive businesses, a strong performance by its Aerospace Engine System division (acquired in 2012 and previously Volvo Aero), but weaker performance by GKN Land Systems.

The board has recommended a 10% increase in the total dividend, taking it to 7.9p per share.

Commenting on the results, CEO Nigel Stein said:

We have again made good progress in-line with our strategy to grow a market-leading global engineering business.  Although some of our end markets were challenging, we continued to show growth and are reporting good underlying financial results, helped by our 2012 acquisition of GKN Aerospace Engine Systems, which performed strongly.  We expect the Group’s progress to continue in 2014.

Despite this morning’s slight fall, at 401p, GKN’s share price is far-outstripping the FTSE over the past year, gaining 64% to the index’s mere 7.4%. And GKN’s performance over five years is almost as impressive, with a 508% gain in its share price, compared to only a 76% rise in the FTSE 100. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

> Jon doesn't own shares in GKN.

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