Feb. 25 (Bloomberg) -- GKN Plc, a supplier of parts to Boeing Co. Dreamliners and Airbus SAS A350 long-range jets, is interested in a facility Spirit Aerosystems Holdings Inc. has for sale as it seeks to grow commercial aerospace revenue.
“We are always looking for acquisitions,” GKN Chief Executive Officer Nigel Stein said on a call with reporters. “It would be entirely logical to assume that GKN had an interest.”
Spirit Aerosystems said last year it was looking to sell a factory in Tulsa, Oklahoma that make parts for the two largest planemakers and wings for Gulfstream business jets. Triumph Group Inc., based in Wayne, Pennsylvania, has said it is interested in at least part of the unit.
GKN bolstered its commercial aerospace activities with a deal in 2012 to acquire aircraft engine maker Volvo Aero. The business, now part of GKN Aerospace Engine Systems, helped generate a 92 million-pound trading profit and a 14 percent trading margin at that unit, Redditch, England-based GKN said in a statement today.
GKN, which made reducing debt from the Volvo transaction a priority last year, cut the figure by 139 million pounds to 732 million pounds. Strong profitability of the engine business underpinned the cash performance, departing Chief Financial Officer Bill Seeger. Debt this year should fall roughly as much as in 2013, he said.
GKN said its underlying operating profit rose 20 percent last year to 661 million pounds ($1.1 billion) on a 10 percent increase in sales. Aerospace will help drive further improvement in 2014, it said, even as military sales, which are 27 percent of the unit’s revenue, fall further. CEO Stein said the company is “keen to keep growing.”
Currency effects will limit GKN’s 2014 performance as the strong pound reduces the value of dollar-denominated contracts, Stein said. A one cent movement in the dollar has a 2 million-pound effect on GKN profit.
The forecast for a “significant translational headwind” led GKN shares to fall as much as 5.7 percent. The stock was trading 1.6 percent lower at 408.20 pence as of 10:13 a.m. in London, valuing the company at 6.7 billion pounds.
GKN said the outlook for its automotive business is improving with its Driveline and Power Metallurgy businesses expected to outperform the market. The company plans a 60 million-pound investment this year to support automotive growth, Stein said.
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