GKN, the engineering group, has reported slowing growth as it continues to grapple with its pension black hole and takeover rumours.
In its nine-month trading statement, the FTSE 100 company said it had performed in line with expectations, with sales growing 21pc to £6.9bn in the nine months to September 30. However, the topline was flattered by acquisitions and currency movements; organic sales growth was just 2pc in the same period, totalling £151m.
GKN also said that its trading margin was lower than the equivalent period last year. Though it did not disclose the size of this margin, GKN put it down to its £35m restructuring programme, a number of one-off costs, and the absence of last year’s one-off benefits in GKN Aerospace, one of its divisions.
Shares in GKN, whose pension deficit is understood to have put off prospective buyers, dipped 2.8pc to £3.14 in early trade.
Equity analyst Nicholas Hyett, of Hargreaves Lansdown, said that “GKN continues to make adrenaline-free progress”.
He said that GKN’s Driveline business, which manufactures automotive drive chain components, should be applauded for outperforming the global automotive market, but added that “With global automotive growth expected to be 3pc this year, that doesn’t imply a spectacular growth rate.”
Nigel Stein, the company’s chief executive, said the company had experienced slower growth as he warned of a tough economic environment: “In line with the global economic outlook, we see growth rates easing in our major markets,” he said. “Despite the slightly tougher macro-economic environment, the group continues to expect 2016 to be another year of growth.”
Mr Stein said that the automotive market was now forecast to see a 1pc increase in light vehicle production in the final quarter, and that new commercial aerospace programmes continue to ramp up, although at a slower rate than expected.
However he warned that GKN’s military aerospace programmes and agricultural equipment markets look set to continue their decline.
GKN faces pressure from top shareholders to step up its cost-cutting programme as a looming revaluation of its £2.1bn pension deficit raises fears over future profitability.
One of the company’s top five investors said earlier this year it wants management to go further than the £30m in annual savings and hundreds of job cuts unveiled in July.
The £1.2bn black hole in GKN’s UK pension scheme is expected to widen significantly when an ongoing triennial review is completed before the end of the year, with bond yields at record lows.
The company said in its results in July that the total liability, including international schemes, had increased by £543m in six months to £2.1bn.
It will announce its 2016 full-year results on February 28.