GKN shares falls over concern for US car mkt spending plans

Dhaka,  Tue,  27 June 2017
Published : 15 Jun 2017, 13:26:05
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GKN shares falls over concern for US car mkt spending plans

Engineer GKN was a faller on Wednesday as worries grew that US car demand has stalled.

Panmure Gordon cut GKN to “sell” with a 200p target. Expectations of double-digit growth in 2017 pre-tax profit and EPS [earnings per share] are looking increasingly optimistic given the headwinds in US automotive and Middle East aircraft markets, according to a global report Thursday. 

Sales and loan trends since US interest rates started rising last year imply that car production “is likely to experience a double-digit correction shortly”.

Panmure also predicted that airlines would review spending plans after the Saudi-led travel ban to Qatar added to a glut of wide-body jets in the region. Boeing and Airbus both use GKN components and, said Panmure, the Middle East airlines account for 10 per cent and 8 per cent of their unfulfilled order book, respectively.

GKN closed 1.3 per cent lower at 350.4p in a wider market dragged down by the commodity stocks. The FTSE 100 ended 0.4 per cent lower, down 26.04 points at 7,474.40, after oil prices dropped in response to a US weekly data showing stockpiles increasing.

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