Home NEWS Business GKN reports ‘disappointing’ trading in aerospace arm as it faces external claims

GKN reports ‘disappointing’ trading in aerospace arm as it faces external claims

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Engineering group GKN said trading in its aerospace business was “disappointing” in the third quarter as pricing pressure hit margins and operational challenges took a toll.

The FTSE 100 company also said it was aware of two external claims, one in aerospace and one in driveline, that were expected to result in a £40m charge in the fourth quarter. It declined to give further details on the claims.

Because of these issues and the operational challenges in its North American Aerospace unit, it now expects management profit before tax for the year will only be slightly above 2016.

Nigel Stein, chief executive, said: “GKN continues to grow well against its end markets although recent margin performance has not met our expectations. In addition, it is disappointing that we expect to have to provide for two unexpected claims which will slow our steady growth in profits.

“In light of the trading performance in North American Aerospace, we are redoubling our efforts to improve our operational performance in that business, as well as developing actions to accelerate margin improvement plans across the group, including through the broader adoption of Industry 4.0.”

GKN has been the subject of perennial talk that it could be broken up between its dominant automotive and aerospace units. GKN’s Driveline automotive business is responsible for about half of the group’s revenues with annual sales of £4.8bn.

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