GKN, the automotive and aerospace group, is to cut 1,400 jobs after giving warning that its profits will be 20 per cent lower this year because of a dramatic slowdown in its main businesses.

The company, which makes drivetrains for cars, has shut down factories and introduced flexible working at its sites in the UK and United States. GKN's shares fell 17.75p to 99.75p after the news and are 72 per cent below this time last year.

In a trading statement issued today, GKN said that sales in the past three months were 4 per cent up on last year and up 7 per cent over the past nine months.

However, the company said that it was experiencing a "significant deterioration" in orders and now expects automotive sales to fall by 15 per cent in the final quarter and by a further 9 per cent next year.

It predicts that full-year profits will be 20 per cent lower because of the downturn and costs associated with restructuring production. GKN reported pre-tax profits of £199 million last year and its latest guidance suggests that profit this year will be about £160 million.

GKN's two factories in Birmingham and one in Telford, West Midlands, which employ 2,500 automotive workers, will be hit by the production changes and job loses. However, its 2,500 British aerospace workers are not expected to be affected by the overhaul.

Profits in GKN's aerospace division, which makes components for the civil and defence sectors, were up 10 per cent in the past three months but the company said that a strike at Boeing could affect fourth-quarter sales.

On a positive note, the company said that input costs had started to fall in recent weeks. Scrap steel, which is a key raw material in the automotive sector, had fallen from a peak of $870 a tonne in July to $230.

GKN is planning to buy Airbus's Filton factory near Bristol in January.

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