By Rhys Jones
LONDON, July 30 British car and plane parts
maker GKN posted a better-than-expected 5 percent rise
in first-half profit on Tuesday, led by a strong performance
from the group's expanding aerospace business, sending its
shares to an all-time high.
Pretax profit of 278 million pounds ($427 million) in the
six months to July topped the average analyst forecast of 272
million pounds, aided by the impact on the firm's bottom line of
the purchase of Volvo Aero last year.
GKN's aerospace business, which makes airframes for Airbus
and Boeing, delivered a 37 percent rise in first
half profit, as the rival planemakers ramped-up production to
Global airlines will buy $3.5 trillion of aircraft over the
next 20 years to meet demand for travel to and from emerging
markets and renew ageing fleets in the West, according to Airbus
and Boeing, helping suppliers such as GKN.
Shares in GKN, which have risen 20 percent in the last three
months, rose as much as 6.8 percent in early trade to hit an
all-time high of 349.4 pence. The stock was 5.5 percent up at
345.25 pence by 0850 GMT, valuing the group at around 5.6
Jefferies analyst Sandy Morris said GKN's trade had been
"significantly better" in the first half of the year than he had
expected and he said he believed the company has "ample room for
manoeuvre" if it is mulling a sizeable acquisition.
GKN made no comment about recent press reports linking it
with a takeover bid for U.S. group Spirit Aerosystems or
a move for Spirit's wing factory in Tulsa, Oklahoma.
The company, whose net debt rose 6.5 percent to 928 million
pounds during the period, largely down to the Volvo Aero
purchase, is in a good position to do deals if it so wishes,
said GKN chief executive Nigel Stein.
"What I can say is, we like to keep our balance sheet in a
strong position ... and considering the size of our business I
would say we have a well-positioned balance sheet," he said.
The company expects the aerospace unit, which accounts for
around 40 percent of group profits, to make further progress in
the second half, helped by the ramp up of new programmes - such
as the Airbus A350 jet - and synergies with Volvo Aero, now
known as GKN Aerospace Engine Systems.
Profits at another unit, Driveline, which makes driveshafts,
chassis and axles for carmakers such as Volkswagen
and General Motors, fell 3 percent after being hit by
weak demand, especially in continental Europe.
GKN increased the interim dividend by 8 percent to 2.6 pence
and said first-half revenues grew 12 percent to 3.87 billion.