New GKN boss ousted before he even starts

ENGINEERING firm GKN has ditched its incoming chief executive while warning it could have to write off a further £130m.

Kevin Cummings, chief executive of the firm’s aerospace arm, was appointed to the top job two months ago and had been due to take over on January 1.

However, he left yesterday with immediate effect after the board said the FTSE 100 company needed ‘alternative leadership’.

GKN gave few details on the decision – which pushed shares down 4.7pc – but it appears to be linked to a damaging review of finances at its aerospace plants in the US.

The mounting problems have fuelled further speculation of a break- up at the £ 3.5bn firm, which built Spitfires during the Second World War and now makes car, plane and machinery parts for clients around the world. Fears are also being raised for the company’s dividend.

Cummings, 55, had been chief executive of the aerospace division since 2014, having joined the US business in 2008. He was named chief executive of the whole firm in September and was due to take over after current boss Nigel Stein retires at the end of the year.

But, in October, GKN issued a profit warning, saying it expected profit for the year to be only slightly above 2016. Bosses flagged two potential legal claims against the aerospace and automobile divisions, which could cost up to £40m. They also highlighted operational challenges at the aerospace division.

The firm said it would write off around £15m at its aerospace plant in Alabama, after a review of the value of the stock and the amount owed by clients. That triggered a wider review of aerospace plants in t he US, with bosses announcing yesterday they were likely to write off a further £80m to £130m as a result. Bosses said yesterday: ‘The board has concluded that the next stage of GKN’s development is best delivered under alternative leadership.

‘As a result, Kevin Cummings, previously CEO designate, will leave the board and GKN with immediate effect.’

Non- executive director Anne Stevens, 69, will step in as interim chief executive until the role is filled permanently.

The turmoil comes amid fresh speculation in recent weeks that GKN could split its aerospace and automotive divisions to create two FTSE 100 companies.

Yesterday, RBC Capital markets analyst Wasi Rizvi said the turmoil may be seen as making a break-up more likely.

Nicholas Hyett, an analyst at Hargreaves Lansdown, said: ‘Losing one chief executive is unfortunate, effectively losing two starts to suggest carelessness.’

Details of any pay-off for Cummings, who earned £1.4m during 2016, have not yet been revealed.

GKN said it had started the search for a new chief executive, considering both external and internal candidates.

Hans Buthker, formerly chief executive of Fokker Technologies, is now in charge of the aerospace division.