Profit warning at GKN on poor Euro markets

ENGINEERING firm GKN yesterday warned that challenging European markets would weigh on its order books, sending its shares down.

The FTSE 100-listed engineer reported broadly flat pre-tax profit in the three months to September, as it said a continued market slump would impact the group for the full year.

It added that macroeconomic conditions have “deteriorated” in recent weeks, and as a result its order book has weakened, particularly in the European car and industrial markets.

GKN, which makes parts for cars and planes, reported pre-tax profit for the third quarter of £99m, down from £100m in the third quarter of last year.

Revenue increased to £1.6bn over the quarter, up from £1.48bn last year.

The automobile division accounts for around half of group sales. It was boosted by the performance of Getrag Driveline Products, which it bought last year.

The company said its aerospace unit posted a 7.6 per cent increase in profit during the period, helped by the strong growth in civil aviation programmes, which has offset falling military sales.

Chief executive Nigel Stein said yesterday: “Looking forward, European markets seem to be softening further. We continue to focus on driving performance, keeping close control of our cost base.”

Stein added: “Other automotive markets and the civil aerospace market are expected to remain solid.”

GKN shares closed down 3.35 per cent yesterday at 204.8p as news of the profit warning broke.