October 16, 2012 / 6:41 AM / 5 years ago

UPDATE 1-European autos slowdown hits GKN

2 Min Read

LONDON, Oct 16 (Reuters) - British car and plane parts maker GKN said a sluggish European automotive market weighed on third quarter profit and that a continued slump could impact the group for the remainder of the year.

The company reported a largely flat pretax profit of 99 million pounds ($159 million) on sales 8.4 percent higher at 1.6 billion pounds for the three months to the end of September.

"Macroeconomic conditions have deteriorated in recent weeks and some softening in order books is now evident, particularly regarding European automotive and industrial markets," said GKN chief executive Nigel Stein in a statement on Tuesday.

"Other automotive markets and the civil aerospace market are expected to remain solid."

The group's Driveline unit, which makes products such as driveshafts, chassis and axles, reported an 8.7 percent fall in profit during the period.

GKN's autos division, whose biggest customers include Audi , BMW and Volkswagen, accounts for around half of group sales and has been boosted by the contribution of Getrag Driveline Products, which it bought last year.

The company said its aerospace unit, which makes airframes for Airbus and Boeing, delivered a 7.6 percent rise in profit during the period, helped by the ramp-up of several civil aerospace programmes, which have offset falling military sales.

GKN, which earlier this year bought Volvo's aerospace division for $990 million, said it expected its fourth quarter to show the usual seasonal improvement, though warned the softening market could impact its performance.

Tough markets in Europe and China have hit engineers hard in recent weeks, with Morgan Crucible and Cookson both warning on profit this month.

Aerospace engineer Bodycote said on Tuesday that trading had been volatile, but was in line overall.

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