GKN Share Discussion Threads

[alphahunter] 08/7/2017 07:25

Bloomberg

Say what you like about Volvo, whose vehicles are famously safe but boring, its staff certainly know how to write a press release. On Wednesday, the Swedish auto-maker declared the end of the “solely combustion engine-powered car” and trumpeted how from 2019 all of its cars will have an electric motor.To be clear, that doesn’t mean Volvo -- owned by China's Geely Automobile Holdings Ltd. -- is about to do away entirely with petrol or diesel engines, nor will it sell only fully electric cars, a la Tesla Inc.While Volvo does plan several battery-electric models, many of its vehicles will still have a combustion engine. The difference is that, from 2019, all will be assisted by an electric motor to make them more fuel-efficient. So-called "mild-hybrid systems" use an electric motor to support propulsion from a combustion engine, whereas "plug-in hybrids" let a car run fully in electric mode for a while. Volvo will sell both. Volvo’s announcement is environmentally pleasing, but its suppliers are probably the biggest winners. Cars that need both combustion engines and electric motors are a win-win for the autos supply chain because there’s potential to contribute a lot more technology in each vehicle.Take France's Valeo SA, which thinks the stuff it supplies for the powertrain of a high-voltage, plug-in hybrid is nine times more valuable than in a regular car. For pure electric vehicles, it's just seven times as much. That’s not bad either, but it suggests hybrids -- which last year made up about 2 percent of Europe's car sales -- are the supplier sweet-spot.This extra sales opportunity is one reason Valeo shares trade on almost 14 times earnings and Germany's Continental AG fetches almost 12 times. In contrast, prestigious customers such as BMW AG and Daimler AG trade on barely half that.
ELECTRIFIED SUPPLIERS

There’s a catch, though. While a few golden years beckons for suppliers, the plug-in hybrid era probably won’t last too long. From a cost perspective, it’s a bit daft to have both an electric motor and a combustion engine in the car. Berenberg analysts think electric powertrains could be priced the same as hybrids by about 2021 and will be as cheap as combustion engines by 2025. Indeed, Volkswagen AG says as many as one-quarter of its sales will be fully electric by 2025. That's when some of the hybrid magic might wear off. Suppliers could face new rivals and carmakers may decide to bring more powertrain work in-house, if only to give employees who built combustion engines something to do.Technologies like fuel-injection and exhaust systems, which suppliers build for petrol and diesel vehicles, will become obsolete too (see my recent piece on Germany's Schaeffler AG).So hybrids look destined for a far shorter lifespan than the world-changing combustion engine. Suppliers may look back at Volvo's announcement as the very best of times.

[alphahunter] 30/6/2017 09:53

Haven't heard anything for a while - nor have I about their pension obligations.
Stock & sector under pressure from auto peer's PW, and GS cut in PT.

[finkwot] 29/6/2017 09:20

Has the Chinese takeover story entirely dried up for now? I haven't seen anything for a while.

[alphahunter] 14/6/2017 15:18

A380, further cuts
Auto, further slow-down
Airbus UK supply chain
Panmure, turns to SELL

[alan@bj] 27/4/2017 21:11

Maybe, but overpromising and under delivering is always punished. Better to be cautious, surely?

[rogerrail] 27/4/2017 16:03

I don't disagree with this analysis, the problem is the announcement sounded a little downbeat which I put down to civil aerospace transitioning to new models and problems such as on the P&W A320 engine, but with further ramp up of new models , the board should have painted a much brighter picture for the medium term.

[alan@bj] 27/4/2017 14:24

From The Times "Tempus" column today:-
GKN
There is a strong argument against quarterly reporting, especially for a company such as GKN that has a number of moving parts, selling into the automotive and civil and defence aerospace sectors. The market can take too much from one set of data that may not reflect the real long-term picture. GKN therefore took the decision not to report actual numbers for the first quarter of this year, even if the trajectory across the business is generally positive. The company is well positioned to supply the four-wheel-drive market and it is already contributing to the F-35 Joint Strike Fighter programme in the US. Aerospace, though, in the first quarter was probably the weakest performer while its Driveline business, which supplies the four-wheel-drive market, did better than expected in what was a strong period for the industry as a whole.

GKN can therefore be expected to continue to beat the overall performance in the automotive industry, where production is set to grow by a muted 2 per cent this year. The earlier acquisitions of Volvo and Fokker will continue to perform and analysts are expecting a further 10 per cent rise in revenues this year.

The shares fell 6½p to 359½p. They were already up by 10 per cent or so this year, and the market appears to have taken to heart some cautious comments that the rate of growth in the first quarter may not be sustained. GKN is the classic macroeconomic play and, on ten times earnings, the shares do not look overly expensive.

My advice Buy
Why Prospects for the current year look solid enough

[broadwood] 26/4/2017 07:23

Skipped out first thing on slower growth forecast. Think it was the right decision - although have held these for years.

At least, doubled money.

[grahamburn] 21/3/2017 11:49

There was an article on the front page of the Sunday Times Business News this week which reported:

"Engineering giant GKN is toying with a rare fix for its £2bn pensions black hole — raising £250m of debt to pump into the schemes."

and stating that:

"Fixing GKN’s pension deficit could be a catalyst for the industrial heavyweight to do more deals, by bulking up either its aerospace or automotive arms. City sources believe it could even open the door to a break-up of the company."

But, at the end of the article:

"GKN declined to comment."

So, who knows whether the "toying" has any legs.

[3dwd] 21/3/2017 10:36

Peel hunt raise 475....now let's hope we get the pension news

[alphahunter] 13/3/2017 07:00

GKN Plc : Berenberg raises target price to 400p from 346p

[alan@bj] 08/3/2017 21:23

You mean you've sold half of your holding?

[alphahunter] 08/3/2017 19:04

GKN Plc : HSBC raises target price to 445p from 395p
I've taken half the chips off the table today.

[alphahunter] 08/3/2017 08:56

Following Nissan's and Vauxall/Peugeot's comments, GKN would benefit for the need to onshore more components and strengthen the automotive supply chain in the UK.
Talks of £100m fund to that effect.

[bonio10000] 01/3/2017 15:48

Good news.

Good British company.

[alphahunter] 01/3/2017 08:12

GKN : *JPMORGAN RAISES GKN PRICE TARGET TO 410 (399) PENCE - 'OVERWEIGHT'

[broadwood] 28/2/2017 13:12

GKN's sales and profits rose in the year to the end of December.

On a management basis sales rose by 22% to £9,414m and operating profits were up 14% at £773m.

Pre-tax profits were up 12% at £678m and earnings per share rose by 12% to 31.0p.

On a reported basis, sales were up 22% at £8,822m, operating profits were up 4% at £335m and pre-tax profits rose by 19% to £292m.

The dividend of 8.85p per share is up 2%.

Chief executive Nigel Stein said: "This is a good set of results with GKN continuing to make underlying progress in line with our expectations.

"We performed well against our key markets, overcoming some demand weakness and demonstrating once again the strength of our businesses, strong market positions and leading technology.

"Strategically we made good progress, including smoothly integrating Fokker and completing the disposal of Stromag - evidence of our sharper focus on capital allocation towards Aerospace and Automotive markets.

"We expect 2017 to be another year of further growth, helped by the benefits of the actions taken in 2016 and GKN's constant focus on continuous improvement."

[leadersoffice] 28/2/2017 11:15

Biggest rise since last July/AugustNice results

[alphahunter] 28/2/2017 10:15

End of live presentation.
With the pension contributions almost capped and a pension deficit under control, GKN still looks lowly valued vs Auto/Aerospace subcontractor peers.

[alphahunter] 28/2/2017 08:13

I spent 50' trying to figure out what the expectations were on this one, notably for the net debt. I'm glad the market is taking the numbers ex-Fokker well, but the conf call will hopefully confirm that.