GKN warns of sluggish European car demand GKN, one of the UK's largest engineering groups, has posted a jump in full-year revenues and pre-tax profit, but added a note of caution for the 2013 outlook for European car sales. The FTSE 100 company is one of the world's biggest makers of driveline systems - equipment to control vehicle steering - and late last year issued a profit warning because of sluggish European demand for new cars. That caution was reiterated on Tuesday, with the world's biggest maker of steering joints by sales warning that it would take £21m of restructuring charges at its driveline and powder metallurgy divisions in the first quarter of 2013. GKN, which employs 44,000 people across 35 countries, will cut 200 jobs in Japan and Germany as part of the restructuring. "First-half results will be impacted by lower market demand in Europe and, recognising that the market is unlikely to recover for some time, actions are being taken to reduce the fixed-cost base," warned GKN. The news dragged down GKN shares as much as 4.2 per cent to 241.8p in early London trading. GKN's gloomy forecast came amid a backdrop of record pre-tax profits and revenues during 2012. In the 12 months to December 31, GKN reported revenues up from £5.7bn to £6.5bn, and pre-tax profit that jumped from £351m to £588m, which the group partially attributed to yearly changes in the accounting of derivatives. On an underlying basis, pre-tax profit rose from £417m to £497m. 2012 was another strong year for GKN with record profits in all four divisions. The group has continued to make good progress financially and in implementing our strategy to build a market-leading global business, with excellent technology, a focus on operational excellence and above-market growth," said Nigel Stein, GKN's chief executive. Diluted earnings per share rose from 17.9p to 30p, and a final dividend of 4.8p (4p) was proposed, bolstering the total payout for the year from 6p to 7.2p. Sales at GKN's driveline division, which makes driveshafts, sideshafts and propeller shafts, rose from £2.8bn to £3.2bn year on year, buoyed by last year's acquisition of the driveline division of Getrag, the privately owned German business that supplies all-wheel-drive transmission systems. GKN's aerospace unit also reported strong sales growth - up from £1.5bn to £1.8bn - as strong growth in civil programmes offset reduced military sales. The division's numbers were also buoyed by last year's £633m cash purchase of the aerospace components arm of Volvo, the Swedish industrial group. Harry Philips, analyst at Oriel Securities, on Tuesday edged up his expectations for GKN's 2013 numbers, but said the increase was less than hoped for due to the group's £21m restructuring charge. "This is a robust outlook statement for this time of year," he said. GKN's market-leading positions and growth potential in both auto and aerospace continue to be inadequately reflected in its current valuation.