GKN boss axed before he starts
ONE of Britain’s biggest engineers, GKN, has ditched its incoming chief executive weeks before he was due to take charge after another big writedown at the business he used to run.
Shares in the £5billion FTSE 100 group fell 14¾p to a 15-month low of 296p after it parted company with Kevin Cummings just two months after announcing he would succeed Nigel Stein in January.
Last month the autoparts and aerospace components group issued a profit warning after being hit with two claims and flagging problems in its North American aerospace business.
Stein described those setbacks, which wiped £600million from its market value, as “like walking down the street and being mugged”.
Cummings, pictured, joined GKN Aerospace in North America in 2008 before stepping up to the role of group aerospace chief executive in January 2014.
Having already taken a £15million charge on factory stock held in Alabama, a review across other Aerospace plants in North America will lead to a further writedown of between £80-130million.
On Cummings’s appointment last month to the top job, GKN chairman Mike Turner said he had made “a substantial contribution since being appointed to the board and I am sure he will be an excellent successor to Nigel”.
Cummings’s pay-off is still being worked out. GKN non-executive director Anne Stevens will take on the role of interim CEO from January 1 until a successor is appointed. Stein will continue to run the company until then. Hans Buthker, who joined GKN with the 2015 acquisition of Fokker Technologies, will now become CEO of GKN Aerospace immediately.
The problems could cast doubt on the attractiveness of aerospace as a standalone business, after speculation GKN could split its automotive and aerospace divisions.
Nicholas Hyett, of investment firm Hargreaves Lansdown, said: “Working capital writedowns happen from time to time, but when they come in waves of ever increasing size investors get worried, with good reason. If US aviation is broken, what about the rest of the business?
“While losing one CEO is unfortunate, effectively losing two at once suggests carelessness. Hopefully whoever takes over from last-minute substitute Anne Stevens gets to kick a ball before they’re unceremoniously hauled off the pitch.”