ENGINEERING group GKN yesterday stuck by forecasts of trading progress later this year despite seeing signs of a faltering economic recovery.

GKN, which supplies products to the automotive and aviation markets and is a major supplier to Nissan's Sunderland plant, believed actions taken to tackle the downturn would pay off.

The outlook came as GKN announced a slight fall in half-year underlying pre-tax profits to £136m from £143m a year earlier.

It also said chief executive Marcus Beresford would retire at the end of the year. He will be replaced by Kevin Smith, currently managing director of GKN's aerospace division.

Mr Beresford said yesterday the company's performance in the first six months had been "encouraging" despite the pressure on its key markets.

He repeated comments made at GKN's annual general meeting in May that the company would improve on the second half performance achieved last year.

Mr Beresford added: "Although since then the economic outlook has become more cloudy, we remain confident in that expectation."

GKN saw pre-tax profits tumble 37 per cent last year and cut 1,250 jobs in its aerospace division as firms cut back to cope with the tough conditions.

The group, which last year spun off its industrial services to focus on making car and plane parts, said current forecasts for vehicle production showed signs of an improved performance on last year.