GKN results cheer City on bumper day for blue-chip stocks

It’s another busy day for company results.

As I wrote last week, at this time of year, a lot of the FTSE-100's big guns publish their full-year results, often making it hard to have a close look at how they are doing.

This is one such day.

Among the blue-chips reporting are Taylor Wimpey, the housebuilder; Provident Financial, the consumer finance group; Croda, the speciality chemicals group; Fresnillo, the Mexican silver miner and St James's Place, the wealth management firm.

The latter is of note because David Bellamy, the company's long-serving chief executive, is stepping down, having been with the business since it launched in January 1992 and having been CEO for the last 11 years, making him one of the Footsie's longest-serving bosses.

It's been a phenomenal growth story although some of the lustre surrounding the group has been lost recently following a series of exposes in the personal finance pages of The Sunday Times that have highlighted the fees it charges.

The other big Footsie name reporting is one of those companies that often prefers to hide its light under a bushel.

GKN, whom older readers may know better as the old Guest, Keen & Nettlefolds, is one of the UK's oldest-established engineering firms and its story is almost that of British manufacturing, its origins dating back to 1759 and the start of the Industrial Revolution.

It supplied cannonballs to the British Army during the Napoleonic Wars, iron to Isambard Kingdom Brunel as he built the Great Western rail line and the SS Great Britain and tanks for the D-Day landings.

These days, its operations are centred around helping people get from A to B.

Its aerospace division supplies technology that, every day, helps transport 100,000 passengers by air.

And its driveline division supplies components and systems to more than nine in 10 of the world's top carmakers.

A third division, powder metallurgy, devises materials and composites used in a range of activities including 3D printing.

Its customer list includes just about every major name in aerospace and car-making, including the likes of Airbus, Boeing, Peugeot, Nissan, Fiat, Volvo, BMW and Volkswagen.

Latest results show a business heading in broadly the right direction.

A 12% rise in full year pre-tax profits to £678m, on an adjusted basis, was better than City analysts had been expecting.

As has been the case with a number of UK exporters, sales received a boost from the devaluation in the pound following the EU referendum, increasing by 22% to £9.4bn.

The stronger dollar, for example, flattered sales by £461m and operating profits by £62m while the stronger euro made those numbers better by £222m and £16m respectively.

Among the other key financial indicators, the company's debt has come down from £769m to £704m.

The only blemishes were that profit margins were down slightly in both the main divisions - in the driveline division this reflected start-up costs on a US-project - and, as is the case with a lot of UK companies at present, a rise in the pension deficit reflecting lower bond yields.

One of the key factors behind this year's performance was a first full year contribution from an equally grand old manufacturing name, Fokker, which was snapped up by GKN for £500m in July 2015.

The Dutch aerospace company, which dates back more than a century, has traded better than expected.

The point about this company and what makes it interesting is that it is doing all of the things that governments have been exhorting British business to do for decades: invest and innovate.

As cars become more technologically complex, so are the components that power them.

That creates opportunities for suppliers and one of the areas in which GKN has sought to innovate is in coming up with a new electric drive system for compact plug-in hybrid vehicles.

Much of the work is couched in secrecy but among the cars in which you will find the firm's 'eAxle' system are BMW's plug-in hybrid i8 and Volvo's XC98 T8. It is also partnering Porsche on its plug-in hybrid 918 Spyder.

A British manufacturing company that invests in technology almost sounds too good to be true in this day and age.

The only sadness is that Britain does not have more such companies.