LONDON -- The shares of GKN (ISE: GKN.L) slid 3 pence, or 2%, to 209 pence in early London trade this morning after the engineer admitted "macroeconomic conditions had deteriorated in recent weeks and some softening in order books is now evident."
The caution accompanied a third-quarter statement that showed sales up 8% to £1,608 million and profits flat at £114 million.
The FTSE 100 (UKX) member said trading during July, August, and September had broadly been in line with expectations, with "more challenging" European markets being offset by greater demand in the U.S. and China.
GKN said its driveline division, which manufactures propshafts, plunging joints, and axles for cars, had seen Q3 profits drop by £4 million to £42 million. However, the group's powder metallurgy operation lifted profits by £4 million to £20 million, while the aerospace subsidiary raised profits by £3 million to £42 million.
Nigel Stein, GKN's chief executive, commented:
In the third quarter, the Group's global footprint with its exposure to the strong markets of North America and China, as well as civil aerospace, allowed us to offset weaker European markets. Profit was affected by expected seasonal factors and operational issues in Driveline. Looking forward, European markets seem to be softening further. We continue to focus on driving performance, keeping close control of our cost base.
He added that softening markets were expected to have "some impact on performance" during the fourth quarter.
Prior to today, City analysts were expecting GKN to deliver earnings of 26 pence per share and pay a 7.4 pence per share dividend for 2012. Such forecasts put the 209 pence shares on a potential P/E of eight and yield of 3.5%.
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