GKN Share Discussion Threads

[valedo] 16/4/2014 08:47

Our third company to be battling currency headwinds, after SABMiller and Michael Page, is GKN. This really does seem to be a case of one step forward, one step back: the engineer reported a 7 per cent rise in revenues in the first quarter, but this was almost entirely offset by a 6 per cent adverse currency translation effect because of the strength of sterling.

As GKN does not export much from the UK, this is less serious than it looks. The real story is the increase in trading margins that the company managed to achieve, because of its strong position in world automotive markets.

GKN supplies pretty well all the world's carmakers and is not reliant on any given market. So while the number of cars produced rose by nearly 5 per cent year on year, the two relevant divisions, Driveline and Powder Metallurgy, grew by 14 per cent and 8 per cent respectively, and this outperformance can be expected to continue even if the general market flattens off over the year, with lower growth expected in China, for example.

So although sales in the first quarter were only 1 per cent higher, trading margins across the group were boosted from 7.4 per cent to 8.7 per cent, and trading profits were ahead by 19 per cent to £166 million. Significantly, margins at Driveline, which makes transmission systems increasingly going into four-wheel drives, hit 8 per cent for the first time since the start of the recession.

GKN shares were little changed at 374p. They sell on a relatively lowly 13.5 times earnings, which looks good value for the sector.
Tempus, today's Times

[rogerrail] 15/4/2014 16:03

with sterlign so strong would not rule out anaother aqusition in the near term even given the debt on the balance sheet.

[broadwood] 15/4/2014 13:58

Aerospace and automotive engineer GKN wowed investors today with a storming set of first-quarter results, which could have been even better but for the strength of sterling.

[rogerrail] 15/4/2014 08:54

yes indeed, all fairly positive and I believe they are underplaying their prospects in aerospace. Civil aircraft programmes are ramping up strongly and defence is set to benefit greatly from recent Gripen orders to Sweden, Brazil, Switzerland, SAAB are also in a good position to win contracts with Denmark and Canada.

[addison17] 15/4/2014 08:16

All fairly positive.

[broadwood] 15/4/2014 08:14

Currency headwinds hurting as expected but otherwise reasonable. Should get back to 420 area when market recovers.

[broadwood] 01/4/2014 09:09

Engineering giant GKN has bought Williams Hybrid Power (WHP), which makes flywheel-based energy storage systems for the bus, truck and tram markets.

"GKN and WHP have been working together to validate the use of this technology and now that this stage has been reached, it is appropriate for GKN to use its global resources and manufacturing capability to maximise the commercial opportunities that exist," GKN said in a statement.

WHP, part of Williams Grand Prix Engineering, has been acquired for £8m with additional proceeds payable subject to future WHP sales over the next decade.

GKN explained that the additional consideration is to be calculated at 3.5% of sales in each of the first five years, declining on a stepped basis to 1.5% by the end of the 10-year period, and shall only be payable to the extent that it cumulatively exceeds £4m.

WHP recorded a pre-tax loss of £1m in 2013 and had gross assets valued at £3.

[bigbertie] 14/3/2014 09:33

valedo, who knows? I am taking a chance that things will settle a bit next week and have added at 366p today. Perhaps they will be sensible - Crimea was part of Russia and still has a majority of Russians (or pro-Russian citizens) and a Russian naval base, so IMHO the Ukranians would be better off without it. Good luck whatever you decide.

[valedo] 07/3/2014 10:36

this becoming a tempting buy/add. as soon as dust settles in Ukraine I guess it will race back to new highs. How much further ,if any, will it drop?

[mozart999uk] 05/3/2014 09:01

pah! What does he know? :-)

[valedo] 04/3/2014 09:11

On the stock market's worst day in two months, GKN's own broker declared that its shares were no longer worth buying.

UBS, house broker to the engineer alongside JP Morgan Cazenove, blamed the strong pound for its decision to downgrade a paying client, something of a rarity in the City.

Charles Armitage, lead analyst at the Swiss brokerage, ran the numbers based on spot rates for currencies last Friday, at the end of a week in which GKN had reported a 17 per cent jump in 2013 profits. For this year, Mr Armitage estimated that "FX headwinds" would trim £42 million from profits.

GKN makes components and spare parts for aircraft and cars, for Boeing and Airbus, BMW, Audi and Jaguar Land Rover. It does so around the world and, Mr Armitage said, sterling had risen sharply against every currency that the company is exposed to. The analyst pared his forecast for GKN's 2014 trading profits by 7 per cent, held his target price for the shares at 400p, but could muster no more enthusiastic a rating on them than "neutral". In response, they fell 12¾p to 393p.
Times

[broadwood] 26/2/2014 08:21

TP increased.

JP Morgan Cazenove GKN PLC 26/02/2014
Reiterates
Overweight Overweight 0 430.00 445.00 410.70 15 2

[broadwood] 25/2/2014 15:07

Upwards no doubt.

Full-year results at auto parts maker GKN were "reassuringly solid", according to Investec, which has placed its recommendation under review.

It said GKN's 2014 guidance looked "broadly consistent with where our forecasts are positioned, although there are headwinds including foreign exchange and defence".

"The company had a better year in 2013 and we expect this momentum to be maintained. For us, the real upside is in Driveline (which we expect to grow ahead of underlying markets at 3%) although a successful launch of (Airbus) A350 will help underpin aerospace profit forecasts."

Investec said that before any foreign exchange-related adjustments, GKN shares trade on a 2014 estimated price/earnings ratio of 13.6 "which looks to be valuing the business's prospects more appropriately".

"We will review our valuation and recommendation, but remain gently positive," it said.

[philo124] 25/2/2014 13:15

Canaccord 500p.

[alphahunter] 25/2/2014 09:45

JPMorgan trimmed their PBT slightly and raised their PT to 445p from 430p, FITW

[leeson31] 25/2/2014 08:58

GKN PLC

25 February 2014

NEWS RELEASE 25 February 2014

GKN plc Results Announcement for the year ended 31 December 2013

Management basis(1) As reported
------------------------- -------------------------
2013 2012(*) Change 2013 2012(*) Change
GBPm GBPm % GBPm GBPm %
-------------------- ------ -------- ------- ------ -------- -------
Sales 7,594 6,904 +10 7,136 6,510 +10
Operating profit 661 553 +20 560 624 -10
Trading margin (%) 8.7% 8.0% 70bps
Profit before tax 578 493 +17 484 568 -15
Earnings per share 28.7p 26.3p +9 24.2p 29.3p -17
Dividend per share 7.9p 7.2p +10 7.9p 7.2p +10
-------------------- ------ -------- ------- ------ -------- -------


*2012 figures restated for the impact of IAS 19 revised. Within Management figures, this had the impact of increasing corporate costs by GBP4 million. Further details can be found in note 2 on page 3.

Group Highlights(1)

-- Group results reflect the continued strong organic growth in Automotive businesses, the contribution from GKN Aerospace Engine Systems (previously Volvo Aero) and the weaker performance of GKN Land Systems
-- Sales increased 10%, up 3% on an organic basis
-- Operating profit up 20%, up 4% organically, and trading margin improved 70bps to 8.7%
-- Profit before tax up 17%

-- Reported profit before tax of GBP484 million (2012: GBP568 million), lower primarily due to a smaller gain on the mark to market of foreign exchange hedging contracts than the prior year

-- Earnings per share up 9% to 28.7p (2012: 26.3p) and total dividend increased 10% to 7.9 pence per share (2012: 7.2 pence per share)

-- Return on average invested capital of 17.3% (2012: 18.0%, excluding GKN Aerospace Engine Systems)

-- Free cash flow of GBP346 million, up 54% (2012: GBP225 million, excluding one-time acquisition related payments)
-- Net debt of GBP732 million, GBP139 million lower than last year

[philo124] 25/2/2014 08:10

OK. Can still see 480p on a 18 month view; in SIPP so will probably hold continue to hold.

[steeplejack] 25/2/2014 08:05

I suspect following on the Rolls Royce figures and given that Goldmans recently downgraded GKN,there was an inclination in the market to give the shares a good thumping if the shares were only moderately in line.Slightly better than expected but still expect some price weakness.

[broadwood] 24/2/2014 16:20

Results tomorrow.

[alphahunter] 21/2/2014 15:51

BAE's PW, is that hugely relevant to GKN?
Valeo + 12% this morning (EUR 98)

[philo124] 07/2/2014 06:50

SG Buy 450p re iteration, 6th Feb.

[alphahunter] 07/2/2014 00:56

Is it time for GKN to make a move?:

[bigbertie] 28/1/2014 09:20

damn - I was looking forward to adding at about 375p....I'll have to wait.