GKN warns over slower euro demand

GKNDeteriorating trends in Europe's car industry has dented engineering firm GKN after it reported "some softening" in order books.

Redditch-based GKN, which makes driveshafts for almost half of all new cars, said challenging conditions in Europe offset stronger demand in the US and China and in its civil aerospace division.
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Chief executive Nigel Stein said: "Looking forward, European markets seem to be softening further. We continue to focus on driving performance, keeping close control of our cost base."

His cautious message caused shares in GKN to fall 4%, even though its third quarter sales increased by 8% to £1.6 billion and profits improved slightly to £114 million. The fourth quarter is expected to show the usual seasonal improvement, although GKN warned that softening markets are expected to have some impact on the performance.

It added: "Macroeconomic conditions have deteriorated in recent weeks and some softening in order books is now evident, particularly regarding European automotive and industrial markets."

Global car production in the third quarter rose 2% to 19.3 million vehicles in the third quarter, despite an 8% decline in Europe and a 5% fall in India.

GKN's aerospace arm, which is a supplier of aircraft components to both Airbus and Boeing, has been helped by continued growth in the civil aircraft market. The business makes fuselage, fan blades and cockpit windshields from sites including Yeovil, Luton, Derby, Portsmouth and the Isle of Wight.

Aerospace sales in the third quarter increased 9% to £392 million, while trading profits were up £3 million to £42 million.

GKN gave a major boost to its aerospace components division earlier this month when it completed a deal to acquire Volvo's aircraft business.

The operation makes the RM12 engine for Saab's Gripen fighter jets, used by the Swedish military, as well as supplying engine components to the three main engine manufacturers, including Rolls-Royce.
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