The largest part of GKN (LSE: GKN)’s business is ‘Driveline’, its automotive engineering operation. Serving a notoriously cyclical customer base, GKN’s prospects are aligned with the car industry’s.
This vulnerability is clear in the company’s five-year record. Although GKN reported net profits of €480m in 2012, the figure back in 2007 was less than half of this. GKN made losses in 2008 and 2009. After being cut substantially in 2008, the dividend was dropped entirely the year after and is yet to return to pre-crisis levels.
A good level of earnings and dividends growth is forecast for this year…