UK's GKN sees more growth this year, warns of dollar impact
LONDON (Reuters) -- UK supplier GKN says it can 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 including Volkswagen Group and airframes for planemakers Airbus and Boeing, forecasts 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.
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 of sales.
"The dollar is going to be a headwind. It's been a tough start," CEO Nigel Stein said, adding that a one percent move in the dollar would have around a 4 million pound ($6.65 million) impact on profit, but that 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," Stein added.
Shares in GKN fell more than 2 percent after yesterday's results, 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 currency movements.
Analysts at Investec said they expected to tweak their forecasts to account for the foreign exchange moves, while analysts at Jefferies added that the comments on currency could be seen as disappointing.
"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 on Tuesday.Contact Automotive News