Engineering giant GKN has seen its profits and trading margins hit by falling demand for vehicles in Europe and Japan – despite a nine per cent revenue rise.

The Redditch-based firm reported a rise in revenue in the first quarter, at £1.89 billion compared to £1.74 billion last year.

However, the depressed automotive market in some parts of the world meant the firm, which makes 55 per cent of profits from its Midland-based automotive Driveline business, saw pre-tax profit fall £4 million, to £119 million. Its figures were hit by a £23 million restructuring charge as it trims headcount in Europe and Japan. Trading margins were also hit – down to 7.4 per cent, compared to 8.1 per cent last year.

However, the profits fall was partly offset by strong growth in China and Brazil, and chief executive Nigel Stein said last year’s takeover of Aerospace Engine Systems – which formerly traded as Volvo Aero – boosted performance.

He said: “With restructuring charges now largely behind us, we expect the remainder of the year to show improvement, supported by our market leadership positions, advanced technology and extensive global footprint.”

Shares in the company rose by one per cent to 248p in early trading after the announcement.

Sales at GKN Driveline fell slightly to £844 million, with a £13 million dip in trading profits, to £51 million, while powder metallurgy revenue was flat, at £235 million. GKN Aerospace saw revenue soar by 47 per cent, to £544 million, with trading profits up by half to £54 million but the firm’s Land Systems arm saw an eight per cent revenue fall, to £244 million, with trading profits down £5 million, to £21 million.

Light vehicle production rose by 10 per cent in China and 11 per cent in Brazil, but there was a 16 per cent decline in Japan, a nine per cent fall in Europe and a six per cent fall in India.