Aerospace and engineering group GKN has confirmed the closure of its pension scheme and announced plans to inject £250m into the fund to help plug a hole, as it unveiled solid first-half results.
The FTSE 100 firm said pre-tax profits surged 207 per cent to £559m in the first six months of the year - a rise on £182m from the same period in 2016. Headline sales rose 15 per cent to £5.2bn in the period. These were driven by favourable currency movements, with underlying growth of five per cent.
Its Driveline division which makes parts for vehicle drivetrains reported a 21 per cent rise in sales to £2.65bn.
GKN confirmed it had closed its defined benefit pension scheme and intends to inject £250m to help tackle its deficit in the second half of the year "and reduce future deficit recovery payments".
The size of the funding deficit in GKN's UK retirement schemes decreased over the past six months, from £1.22bn to £1.06bn. It attributed that decline to life expectancy not improving as quickly as previously expected.
Shares were flat in morning trading.
Why it's interesting
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "Currency has turbocharged GKN’s results, but the underlying numbers aren’t too shabby either. Aerospace is steady and in line with the market, as a strong performance from military aircraft helped to offset a lacklustre result in commercial."
GKN is also proving sensitive to "the dangers a shift to electric vehicles might pose" and Hyett notes "an early move into the market has given it a strong position".
What the company said
GKN's chief executive Nigel Stein said:
We made progress in the first half and are on track for the full year. We are performing well against our key markets, demonstrating once again the strength of our businesses, strong market positions and leading technology. We continue to invest for growth and have made significant progress to address our UK pension deficit.
Our focus on innovation in key areas such as electrified drivetrains, additive manufacturing and Industry 4.0 is paying dividends and underpins our confidence in the longer term.
2017 is expected to be another year of growth.