Newspaper article The Evening Standard (London, England)

GKN Down by 25% as Cars Slump Goes Global

Newspaper article The Evening Standard (London, England)

GKN Down by 25% as Cars Slump Goes Global

Article excerpt

Byline: MICKEY CLARK

THE automotive and aerospace engineering group GKN lost a quarter of its stock-market value today after warning that the slump in the car industry means its profits will come in much lower than expected.

GKN supplies all the world's major car and light-vehicle makers with components and, while it had already anticipated the massive slowdown in the US market, it had not expected the rapid knock-on effect on European and other markets around the world. GKN expects its fourth-quarter automotive profits to be 70% down on the same quarter in 2007.

Aerospace demand has held up well, but is likely to now be hit by the Boeing strike in its final quarter.

Most analysts had been looking for modest growth from GKN with profits forecast to rise from ?255 million in 2007 to around ?265 million. Those forecasts have now been slashed to around ?200 million.

The group plans to cut its workforce, shut down some plants and move to short-time working at others. Most of the job cuts will come among the 1400 temporary workers who make up the group's 42,000 workforce worldwide.

In the UK, GKN employs around 5000 people, of whom 2000 are in the automotive businesses. The shares fell 29?p to 88?p.

Elsewhere, investors were taking another beating with share prices briefly touching their lowest since March 2003 following another sell-off in Asia this morning, which saw Tokyo's Nikei 225 slump to a 26-year low.

The FTSE 100 index later reduced the deficit to 116.72 at 3766.64. All eyes are now focused on Wall Street this afternoon..

Turnover has slowed to a trickle with even the bargain-hunters proving too timid to move. This is the stuff traditional bear markets are made of a complete loss of confidence.

Aviva was a nervous market, leading blue-chips lower with fall of 30p at 217?p ahead of third-quarter results tomorrow. Rumours running around the Square Mile claim the life assurer may decide to cut the dividend in order to conserve cash. …

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