Revenues from the Asia-Pacific region and Latin America continued to grow.
“Powder Metallurgy performed strongly returning our US business to profitability and improving margins in Europe. We also continued to grow revenues in Asia Pacific and Latin America, creating a business with a better geographic and customer mix. Powder Metallurgy is now well set for a sustained period of growth.

GKN has large manufacturing interests in PM, with GKN Sinter Metals as a major player in the components industry and Hoeganaes Corporation as one of the leading manufacturers of advanced metal powders. Over the past two years GKN Sinter Metals has focused on maintaining the profitable expansion of its European sintering business whilst returning its US operations to profitability. Powder manufacturer Hoeganaes has focused on growing profitability in its European business, improving operating performance.

“Overall automotive profits improved slightly despite well-publicised turbulence in our major markets. A significant downturn in US auto production and a particularly weak third quarter demand in Western Europe combined to significantly challenge the skills of GKN plant management in both markets.

“Our Driveline driveshaft’s business found conditions particularly difficult and profits were down as a result. The foundations of the business remain solid and with our restructuring programme completing in 2007, we are confident of achieving improved performance in the coming year.

“The outlook for our major markets is positive, despite some uncertainty around the strength of North American automotive demand. Forecasts for the global automotive market remain mixed with overall growth in 2007 production projected at three to four per cent.”

Within this, he said, Western European output was forecast to be broadly unchanged and North American demand was also expected to be at a similar level to 2006, although slightly down in the first half. Good growth is expected in emerging markets including China and India, which represent a growing percentage of the Group’s sales.

“Off Highway demand in North America is slightly down on last year although sentiment appears to be improving; European markets and the mining and heavy construction sectors generally are expected to be good.

North American automotive production in 2006 was 15.3 million units, a reduction of 2.5 per cent from the 15.7 million in 2005. Within the overall figure there was again a significant change in market share with DaimlerChrysler, Ford and General Motors continuing to lose market share to foreign manufacturers.

• GKN has announced the appointment of Marcus Bryson and Andrew Reynolds Smith as executive directors with responsibility for the Group’s aerospace and powder metallurgy, off highway and industrial services businesses respectively. Mr Bryson, 52, has more than 22 years service with Westland and GKN in various aerospace related roles and is currently president and chief executive, GKN Aerospace. Mr Reynolds Smith, 41, joined GKN in 2002 and has held positions in the Group’s Driveline and Sinter Metals businesses and is currently president and chief executive, GKN Sinter Metals.