LONDON - British engineering firm GKN Plc posted a nine percent rise in 2002 pre-tax profits on Monday, and said the outlook for its automotive markets was uncertain but there were no signs of a substantial fall in demand.
Its shares leaped after GKN reported pre-tax profits before exceptionals and goodwill amortization of 267 million pounds ($421.6 million), up from 245 million in the previous year and above the top end of market expectations of 260 million pounds.
Sales rose three percent to 4.5 billion pounds. More than two-thirds of the company's sales are in car parts to the automotive sector. It also lifted its total dividend to 11.3 pence per share from 11 pence in the previous year.
"The outlook for the major automotive markets remains uncertain," Chief Executive Kevin Smith said in a statement.
"Some weakening is anticipated compared with 2002, particularly in the first half, but currently there are no indications of a substantial reduction in demand, notwithstanding anxieties about conflict in the Middle East."
The automotive and aerospace engineer also said the slump in world stock markets meant it had to plan for a 60 percent increase in cash contributions to its British pension fund to about 53 million pounds for 2003.
"This increase is well within the cash flow and balance sheet capability of the group," said the company, adding that it would not know the exact contribution required until it had completed an actuarial valuation of the fund next month.
GKN's shares were up 13 percent at 178 pence at 0810 GMT.
Under pressure from weaker motor vehicle markets in the United States and Europe, the stock has underperformed the benchmark FTSE 100 Index by about 35 percent over the past six months.
GKN also owns half of AgustaWestland, the world's second-biggest helicopter maker and a joint venture company with Italy's Finmeccanica SpA. The helicopter maker has slashed jobs in response to a smaller production program.
On the civil aerospace market, Smith said: "Civil markets look certain to remain depressed until 2004 and beyond, while demand for military aircraft, which accounts for some 80 percent of our aerospace sales, is likely to grow."