GKN’s £352m acquisition of US company Sinter Metals has established the automotive component and aerospace company as the giant among powder-metal parts producers.
The move has also improved GKN’s City image – dimmed by the $327m (£202m) Meineke Discount Mufflers damages award.
`An excellent purchase,’ said GKN-watcher Robert Speed at stockbroker Henderson Crosthwaite. `Sinter will be earnings-enhancing in year one, and its acquisition shows a commitment to a major growth market.’
In the US, powder metallurgy enjoys double-figure annual growth with an increasing take-off by the automotive industry. Growth is a slower 6% in Europe, where cars are smaller, but manufacturers here are fast getting the message about the product’s qualities.
Ahead of the deal, GKN’s annual powder-metal sales were about £65m. CK Chow, group chief executive, said that, with Sinter in the sums, the company was promoted to the world’s biggest player in precision pressed powder-metal parts, with total sales of some £327m.
Speed forecasts group profits this year of £385m (£362.8m), rising next year to £425m.