GKN Announces Pounds 150m Restructuring Programme, Up to 2,000 Job Losses Expected

Strategic Insights -

GKN, a leading UK engineering group, has unveiled a Pounds 150m restructuring programme aimed at reducing costs in its core vehicle components business. The move, which is expected to result in up to 2,000 job losses in western Europe and the US, comes as the company reports a 8% decline in profits before goodwill amortisation and exceptional charges to Pounds 246m in the year to December 31. Despite a 3% increase in sales to Pounds 4.58bn, the company's earnings per share rose only 1% to 13.8p.

Key Takeaways:

  • GKN is implementing a Pounds 150m restructuring programme to reduce costs in its core vehicle components business.
  • The programme is expected to result in up to 2,000 job losses in western Europe and the US.
  • Profits before goodwill amortisation and exceptional charges declined 8% to Pounds 246m in the year to December 31.
  • Sales increased 3% to Pounds 4.58bn, but earnings per share rose only 1% to 13.8p.
  • GKN will transfer approximately 20% of its production of constant velocity joints from high-cost locations to low-wage economies over the next three years.
  • The company's pension fund deficit rose from Pounds 6m in 2002 to Pounds 23m and is expected to reach Pounds 40m this year.
  • Net borrowings decreased to Pounds 793m at the end of 2003, from Pounds 834m a year earlier.

Statistics:

  • Pounds 150m: The value of GKN's restructuring programme.
  • 2,000: The expected number of job losses in western Europe and the US.
  • 8%: The decline in profits before goodwill amortisation and exceptional charges to Pounds 246m.
  • 3%: The increase in sales to Pounds 4.58bn.
  • 1%: The increase in earnings per share to 13.8p.
  • Pounds 246m: The profits before goodwill amortisation and exceptional charges in the year to December 31.
  • Pounds 4.58bn: The sales figure for the year to December 31.
  • 13.8p: The earnings per share for the year to December 31.
  • Pounds 7.8p: The final dividend paid by the company.
  • Pounds 173m: The pre-tax profits for the year to December 31.
  • Pounds 264 1/2p: The closing share price of GKN.

Sources:

  • "GKN announces Pounds 150m restructuring programme" (The Times)
  • "GKN's shares close 9 3/4p down at 264 1/2p" (The Times)
  • "GKN reports 8% decline in profits" (Financial Times)