Update: H1 results: Overcoming FX headwinds, but not a rising tax charge
GKN’s H1 results were in line with our forecasts, and with the company’s guidance at the time of the 15 April IMS. However, the statement suggests that organic growth in the two automotive-focused divisions should offset FX headwinds in H2, which appears to us to be a significantly more optimistic outlook than the company felt able to state at the FY stage in March. We have upgraded our trading forecasts for 2014-16e by 5-7%. However, a tax charge that GKN concedes is likely to rise by c 2% pa reduces much of this benefit at the EPS line; our 2016 EPS forecast increases only 1.5%.GKN plc is a global engineering company. The Company is engaged in the design, manufacture and service of systems and components for original equipment manufacturers. The Company operates in four segments: GKN Aerospace, GKN Driveline, GKN Powder Metallurgy and GKN Land Systems. The GKN Aerospace segment is a supplier of airframe and engine structures, landing gear, electrical interconnection systems, transparencies and aftermarket services. The GKN Aerospace segment is a supplier of airframe and engine structures, landing gear, electrical interconnection systems, transparencies and aftermarket services. The GKN Powder Metallurgy segment is a manufacturer of sintered components and a producer of metal powder. The GKN Land Systems segment is a supplier of power management products and services. It designs, manufactures and supplies products and services for the agricultural, construction and utility vehicle markets and industrial segments.
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