Auto and plane parts manufacturer GKN reported first quarter profit down 4% because its auto parts unit was affected by a drop in vehicle production in Japan, India and Europe.
Today, April 18th, the British company said that pretax profit dropped to 119 million pound ($181.3 million) during the first quarter, mainly due to a 23 million pound restructuring charge connected to job cuts in Japan and Europe. Driveline, which manufactures chassis, driveshafts and axles, reported profit down 20%, affected by weak demand especially in the European market. Driveline profits account for almost 55% of GKN’s total profits.
Demand for new vehicles in Europe continues drop due to the financial crisis and the governments’ austerity measures to cut debts. During the first quarter auto sales in the region dropped 10% forcing automakers to reconsider their 2013 targets. GKN reported global light vehicle production down 1% during the first quarter with Brazil and China offsetting declines in India, Europe and Japan.
GKN’s aerospace unit, which manufactures airframes for Boeing and Airbus, reported an increase of 50% during the first three months of the year, due to several civil aerospace programmes which offset the drop in military sales. In the following 20 years, global airlines will purchase $3.5 trillion of aircraft to meet increasing demand for travel and also to replace aging fleets.