GKN drops incoming chief executive and warns over a further US hit
Shares in GKN slumped on the shock decision to oust Kevin Cummings with “immediate effect”.
Engineering firm GKN has ditched its incoming boss less than two months before he was due to take on the top job as it warned over another hit in its troubled US plant.
Shares in the group – which makes wing tips for Airbus and parts for car giants including Mercedes and Jaguar Land Rover – slumped 6% on the shock decision to oust Kevin Cummings with “immediate effect”.
Mr Cummings, who has headed GKN’s aerospace business since 2014, was due to take over from incumbent chief executive Nigel Stein on January 1.
GKN remained tight-lipped on the reason for the decision, except to say it had “concluded the next stage of GKN’s development is best delivered under alternative leadership”.
The firm has instead appointed non-executive director Anne Stevens as interim chief executive from January 1 and launched a search to appoint a permanent successor.
Investors took fright as GKN also said a review of its US aerospace plants had uncovered a further hit, with additional write-offs of between £80 million and £130 million.
It had previously expected to write off £15 million on its Alabama facility, relating to “revised assumptions” on programme inventory and receivables balances, which sparked a wider review across the division.
Last month, GKN warned that profits will only be “slightly above” 2016 after it disclosed a £40 million hit linked to legal claims and the Alabama writedown.
The group has now brought forward the start date of new hire Hans Buthker, formerly chief executive of Fokker Technologies, to head up GKN Aerospace immediately.
GKN – which has its headquarters in Redditch, Worcestershire – said Mr Buthker will “work with the rest of the executive team to develop plans to improve margins and cash flow across the group”.
It is also reportedly looking at a radical break-up plan to split its aerospace and automotive businesses and create two FTSE 100 companies.
Nicholas Hyett, an equity analyst at Hargreaves Lansdown, said: “The board have taken drastic action.
“But while losing one chief executive is unfortunate, effectively losing two at once starts to suggest carelessness.
“Hopefully, whoever takes over from last-minute substitute Anne Stevens, gets to kick a ball before they’re unceremoniously hauled off the pitch.”