GKN blames US slowdown

GKN's aerospace division is doing well

GKN, the automotive and aerospace group, has reported a 23% fall in pre-exceptional pre-tax profits for the first half of the year and that it will cut a third of its head office staff.

The company made a profit of £198m compared with £259m profit for the same period of 2000.

GKN blamed its profit slump on the impact of the US economic slowdown on the company's auto production activities in North America.

"While there are signs that North American vehicle production levels may be stabilising the picture is less clear in Europe," the company said.

Operating profits across its automotive division, which takes a substantial part of its earnings from Ford, DaimlerChrysler and General Motors in the US, fell 25%.

Between 90 and 100 staff will be cut from the head office as part of review which will cost the company £23m in the second-half charge.

Poor outlook

"In comparison to last year, we anticipate vehicle production in both markets to be somewhat lower in the second half," GKN said.

The group said North American car and light vehicle production in the first half fell 13% as the economy slowed.

"In aerospace, helicopter sales in the second half should be comparable to those in the first half and in aerospace services we expect a continuing improvement as the restructuring programme nears completion," the company said.

AgustaWestland, a 50:50 joint venture with Italy's Finmeccanica, is the world's second-largest helicopter maker.

In May, GKN warned at its annual general meeting that a slowdown in the US automotive sector would eat into its profits. It had forecast a fall of over 20% for the first half of the year.

Brambles demerger

On Monday GKN demerged its shares in Brambles Industries after the transfer of its industrial services operations to the Australian-based group was completed.

The demerger had originally been put at £17m, but GKN said it now needs to restructure its "central overheads and systems". As a result costs will rise to £40m.

The results include trade by the support services unit now owned by Brambles.