* GKN says will outperform both civil aerospace and auto
* Engineer reports 12 pct rise in adjusted pretax profit
* Meggitt says it has 'good momentum' going into 2017
* GKN shares up 6 pct, Meggitt up 14 pct
(Adds comments by CEO, share price)
By Paul Sandle
LONDON, Feb 28 Shares in GKN and Meggitt
rose after both British engineering companies reported
better than expected results and predicted that their
investments in technology in aerospace markets were beginning to
pay off as new aircraft production rates increase.
Analysts said share prices across the defence sector had
also got a boost on Tuesday from U.S. President Donald Trump's
promise on Monday to seek an "historic increase" of $54 billion
in the U.S. defence budget.
GKN said both its aerospace division and its automotive
engineering Driveline power transmission business outperformed
their markets last year and had won significant new business,
underpinned by investment in new technology.
"Organic sales growth in commercial aerospace was fuelled by
stronger production of Airbus A350 and A320 (aircraft),
and this outweighed a continued slight decline in organic
military sales," Chief Executive Nigel Stein said.
Commercial aerospace sales rose 3 percent on an organic
basis, GKN said, partly offset by a 2 percent drop in military
sales, while Driveline increased comparable sales by 6 percent.
Stein said Driveline had gained market share, after strong
sales to Fiat Chrysler, Volvo and
Daimler's Mercedes, and its investment in hybrid and
electric vehicles was also starting to pay off, with contract
wins at BMW.
The company said it expected organic sales in its aerospace
division to rise "slightly above" the 2 percent market growth
forecast by independent analysts this year, while automotive
sales would grow ahead of independent predictions of around a 2
percent growth in the global market.
Shares in GKN rose as much as 7 percent to a 20-month high
of 366 pence, topping the FTSE 100 index.
The company reported a 12 percent rise in adjusted pretax
profit of 678 million pounds ($842 million) on sales up 22
percent at 9.4 billion pounds.
Meggitt, which makes a diverse range of aircraft components,
said it too was benefiting from its technology going into new
commercial aircraft, such as the Airbus A350XWB and Boeing
"Our content on the new programmes is between 20 and 250
percent higher than on the old programmes, so as these
programmes ramp up in the next few years, that should drive our
growth to above market levels," said Chief Executive Stephen
Meggitt will also benefit from any increases in defence
spending, led by the United States.
"Military budgets around the world are set to grow from
here, and we are on the growing fleets with good content," Young
Shares in Meggitt, which have fallen 12 percent in the last
three months, were trading 14 percent higher at 474 pence.
It reported a 13 percent rise in adjusted pretax profit to
352.1 million pounds, and said a strong finish to the year gave
it good momentum going into 2017.
(Editing by Kate Holton, Greg Mahlich)