GKN plc Reports Profits Up 34%

The shares of GKN (LSE: GKN) gained 5p to 368p during early trade this morning after the engineer said its third-quarter profits had advanced by 34%.

The FTSE 100 member said group profits before tax had increased from £113m to £152m during July, August and September.

A £21m contribution from the acquisition of what is now GKN Aerospace Engine Systems, alongside trading margins rising to 8.2%, assisted the performance.

GKN also disclosed sales had improved 16% during the quarter, or 6% adjusted for the acquisition. The blue chip claimed demand within its commercial aerospace divisions had been “strong“, while military aerospace and spares showed “a continuation of the weaker demand evidenced in the first half“.

Net debt at the end of September was £973m.

Nigel Stein, GKN’s chief executive, said:

The third quarter showed good progress, supported by automotive demand in China and North America and sustained high output levels in commercial aerospace.  GKN Aerospace Engine Systems made a strong contribution to the Group’s 34% growth in profit before tax.

Prior to today, City experts were predicting GKN’s 2013 results would show earnings at 25.2p per share and a dividend of 7.9p per share.

Following this morning’s price movement, the shares could therefore trade at 14.6 times possible profits and offer a potential dividend income of 2.1%.

Of course, whether that valuation, today's quarterly statement as well as the broader prospects for aerospace engineers all combine to make GKN a 'buy' right now is something only you can decide.

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> Maynard does not own any share mentioned in this article.