GKN is the UK’s second-largest civil aerospace manufacturer after Rolls-Royce, and has ambitions to close the gap with the engine OEM through more acquisitions this year.
The FTSE 100 company has already more than tripled its aerospace revenues in the past decade – taking them to $3.5bn – through organic growth and by snapping up some of the crown jewels of British aero-engineering, notably Airbus’ wing component facility in Filton.
Aerospace now accounts for a third of the group’s sales, and is GKN’s second-most important segment after its car drivetrain division.
Although soaring car manufacture in the UK underpinned earnings last year, GKN is well positioned on new aircraft models and should see aerospace gain ground as the company gradually displaces military activities that are hamstrung by declining global military budgets, with civil programmes.
Every A350, 787 and A330 sold, for instance, has about $3m-worth of GKN equipment aboard. This includes the 787’s oversized windows, the A350’s wing rear spar and A330 flap skins.
GKN’s presence on the A380 includes the wing trailing edge and is worth almost $6m per aircraft, the most of any of GKN’s civil or military lines but still not enough to compensate for the A380’s low sales compared with other aircraft platforms.
The company also has to contend with an unfavourable exchange rate. Most of its aerospace sales are in dollars, which have depreciated from £1.55 to £1.70 in the past year. Every one per cent movement of the dollar in the wrong direction is reckoned to wipe £4m ($7m) off GKN’s profits.
This could mean flat aerospace sales this year, but GKN believes it is well equipped to cope with ongoing currency headwinds.
Alongside its involvement with the forthcoming geared turbofan engine and 737MAX, for which it is producing winglets, the company has also poured money into research to stay at the forefront of composite and metal structures engineering.
Recent technology demonstrators include a microwave cured landing gear panel, a friction stir welded wing skin and its ‘waffle’ winglet.
In a couple of years these technologies will help take GKN’s civil sales to about three-quarters of its aerospace total. That will still be several billion pounds shy of Rolls-Royce’s commercial engine revenue - £6.7bn in 2013 - but should be sufficient to cement the company’s place in the top tier of global aerospace manufacturers.