British engineering group GKN PLC (LON:GKN) has today posted a 12% increase in full year adjusted pre-tax profits, driven by organic sales growth in the auto businesses.
Profit before tax rose to £678mln, in the year to 31 December 2016 from £604mln a year ago. Earnings per share climbed to 31.0p from 27.8p the previous year.
Sales jumped 22% to £9.4bn from £7.7bn, buoyed by 6% organic growth in GKN Driveline.
The auto division's increase in sales to £4.2bn from £3.5bn was supported by a robust performance in Europe where the company gained market share and sales to Fiat Chrysler, Volvo and Daimler. The unit also performed strongly in North America, boosted by the all-wheel drive programme, while it was slightly below the market in China due to lower exposure to domestic producers and smaller vehicles.
GKN Aerospace reported sales of £3.4bn, compared to £2.5bn, including a £769mln contribution from Dutch aircraft manufacturer Fokker Technologies in the first full year of ownership.
On an organic basis, it represented a 1% rise in sales within the business as an increase in commercial sales offset a decline in military sales.
In the land systems business organic sales fell 8% year-on-year due to challenging agricultural and construction equipment markets, while the powder metallurgy division posted flat organic sales.
The dividend was raised 2% to 8.85p from 8.7p.
Free cash flow fell to £201mln from £370mln, due to the absence of a significant customer advance that benefited 2015.
Looking ahead, the group expects GKN Aerospace's 2017 organic sales will grow “slightly above” the market forecasts of 2% as military sales recover.
The company also sees its GKN Driveline business growing organically above independent predications of about 2%, buoyed by growth in global light vehicle production.
“2017 is expected to be another year of further growth, helped by the benefits of the actions taken in 2016 and GKN's constant focus on continuous improvement,” the company said.
Shares rose 5.92% to 363.30p in morning trading.