GKN share price lifts as profits have soar amid a battle with Melrose
Engineering giant GKN revealed profit in 2017 more than doubled as it battles against a £7.4bn hostile bid from turnaround firm Melrose.
The figures
GKN’s profit before tax soared 125 per cent to £658m for the year, while sales rose 10 per cent to £9.8bn.
The firm reduced its UK pension deficit by 44 per cent to £675m and said deficit recovery payments had fallen to £36m a year from 2018.
GKN’s net debt grew to £889m, up from £704m at the end of 2016. The firm proposed a five per cent increase of its dividend to 9.3p.
Why it’s interesting
GKN was thrown into the spotlight last month after Melrose made a hostile bid for the group which GKN immediately rejected.
Because of GKN’s role in the manufacture of military aircraft, the proposed bid has also attracted political attention, with the Prime Minister pledging to “act in the UK national interest” on the deal and the chair of the influential business select committee voicing “serious concerns”.
The group has since worked to convince shareholders its turnaround plan, Project Boost, would benefit the group more than a sale to Melrose. The firm has said its plan will deliver recurring annual cash benefits of £340m from the end of 2020 and £2.5bn in returns to shareholders over the next three years.
GKN also revealed more details on its plan to split its aerospace and driveline businesses, saying it would formally separate the units into two listed companies via a demerger which it aims to complete in mid-2019.
Read more: Ministers are assessing Melrose’s bid for GKN over security concerns
What GKN said
Anne Stevens, chief executive of GKN said:
As I set out two weeks ago, we now need to change our emphasis and ensure that those orders deliver world class financial performance with a renewed focus on strong margins and cash generation.
With Project Boost, I have laid out how we plan to achieve this, through detailed product segment strategies and an emphasis on manufacturing and functional excellence. We are excited about delivering these plans.
Read more: Melrose’s bid for GKN has been approved by US and Canadian regulators