* FY underlying profit 578 mln stg vs 565 mln forecast
* Says currency headwinds could affect 2014 results
* CEO sees acquisition of U.S. wing factory as 'logical'
* Shares down more than 2.0 pct
By Sarah Young
LONDON, Feb 25 Britain's GKN said on
Tuesday it could cope with the impact of a weak dollar versus
the pound after reporting a 17 percent rise in 2013 profits and
forecasting strong demand for car and airplane parts.
The group, which makes chassis and axles for carmakers such
as Volkswagen and airframes for planemakers Airbus
and Boeing, forecast that its auto business
would grow this year at a faster rate than an anticipated 3
percent expansion in the market, and said its aerospace unit
would post higher sales.
But Chief Executive Nigel Stein said: "The dollar is going
to be a headwind. It's been a tough start." He said a one
percent move in the dollar would have around a 4 million pound
($6.65 million) impact on profit, but he was confident that the
company could offset that.
"This should be outweighed by the benefits from the group's
diverse exposure to global markets, strong customer positions
and healthy order books."
Shares in GKN fell more than 2.0 percent, making it one of
the top fallers in Britain's bluechip stock index.
Analysts attributed the drop partly to the stock's strong run -
the shares have risen 11 percent since the start of 2014 and 64
percent in the last twelve months - plus worries over adverse
Analysts at Investec said they expected to tweak their
forecasts to account for the foreign exchange moves. Jefferies
added that the comments on currency could be seen as
"Today's 2013 result is ahead of our forecasts, but the 2014
outlook may not be enough to add momentum to the equity story.
It all reads like good news, but it may already have been
anticipated," Jefferies said.
The company reported underlying pretax profit of 578 million
pounds ($961.25 million), ahead of a company-supplied consensus
forecast of 565 million pounds.
The profit increase was supported by a strong performance in
GKN's automotive business, which accounts for about 45 percent
In its aerospace unit, which makes up about 30 percent of
total sales, GKN benefited as commercial aircraft makers built
more planes. But lower demand for military plane parts due to
government defence cuts was a drag on the business and was a
trend which Stein said showed no sign of changing.
The U.S. government said on Monday it would shrink the
country's Army to pre-World War II levels, with a fiscal 2015
budget proposal due to have a major impact on many weapon
Within its aerospace unit, GKN increased its share of sales
to commercial customers to 73 percent, with military customers
accounting for 23 percent of sales.
GKN's commercial aerospace performance last year was
significantly enhanced by its first full year of ownership of
Volvo Aero, a business it bought for 633 million pounds in 2012.
Stein said GKN continued to assess other acquisition
opportunities in aerospace. The company has in the past been
linked with a wing factory in Tulsa, Oklahoma being sold by U.S.
company Spirit Aerosystems.
"We're ready to look for other opportunities but only for
the right opportunities," Stein said, adding in reference to
Tulsa: "It's known to be for sale. I think it would entirely
logical to assume that GKN has an interest."
Analysts at Canaccord earlier in February estimated that GKN
could spend up to 2 billion pounds on acquisitions.
The company, which has a market capitalisation of about 6.8
billion pounds, also on Tuesday lifted its dividend by 10
percent to 7.9 pence per share.