GKN’s profits slump as its raider circles

GKN will this week reveal a slump in profits, increasing pressure on new boss Anne Stevens as she defends the engineering giant from a £7.4billion takeover bid from corporate raider Melrose.

Pre-tax profits for 2017 are expected to have fallen nearly 20 per cent to £560million, largely due to a £112million write-off in its troubled American aerospace arm.

It is the largest hostile takeover tussle in nearly a decade and is sensitive given that GKN, which can trace its origins back to the Industrial Revolution, employs 6,000 staff in the UK in its aerospace and automotive divisions.

The firm, based in Redditch, Worcestershire, called the swoop ‘opportunistic’ because it came just a few months after problems in the US emerged.

The results give Stevens, who took over as chief executive last month, an opportunity to flesh out her turnaround plan, dubbed Project Boost.

George Salmon, equity analyst at investment service Hargreaves Lansdown, said: ‘The Project Boost strategy may only be weeks old, but this is GKN’s opportunity to convince shareholders that it is serious about making the necessary changes.’

Melrose was forced to reject claims from Labour leader Jeremy Corbyn last week that it was an asset-stripper hoping to ‘make a quick buck’ from the deal.

Bosses of both companies, as well as representatives of the trade union Unite, will be quizzed by MPs in a fortnight about the proposed takeover.