Investors look past currency headwinds and a relatively uncertain outlook to cheer automotive and aerospace engineer GKN's (GKN) interims. The shares are up 6.3% to 364.8p and there is further reward for shareholders with the dividend hiked 8% to 2.8p per share.
Today's rise helps claw back some of the year-to-date decline - though the stock is still down 2.3% since the beginning of 2014.
Like many UK industrials the company is being impacted by the strong pound but despite noting a £24 million hit from the strength of sterling against the US dollar the company is still able to report a 6% year-on-year gain in pre-tax profit to £296 million as it enjoys an improving contribution from its auto supply business.
Less positively the pension deficit rose slightly in the six month period to £1.36 billion and other areas of weakness include the continued decline in the market for military aerospace parts and the conclusion of a key contract in its 'Land Systems' construction and industrial arm.
Chief executive officer Nigel Stein says the company 'continues to outperform' its key markets and expects 'these trends to be maintained in the second half'.
Numis stays at 'buy' with a price target of 435p. It says: 'No further changes to forecasts today and with currencies now appearing to have stabilised attention can move back to underlying value and prospects. With 37% of earnings from aerospace, and automotive making good progress, the shares, trading at a discount to the sector (2014 PE 13.1x v 16.0x) look attractive.'
Westhouse reiterates its 'buy' take and 450p price target, commenting: 'The full-year outlook statement is GKN's customary verbal vagueness without numbers and while on its face it appears slightly negative (Land Systems revenues to be down now vs. 'broadly flat' previously and a stronger expression of FX pressure than previously), we believe that GKN is pointing to a similar second half performance.'