GKN
Overview and introduction
23 February 2016
A Tier 1 Supplier to the major OE manufacturers in Automotive,
Aerospace and Land Systems markets
Global engineering group
GKN Aerospace
A leading first tier supplier to the
global aerospace industry.
Sales of £7.69 billion in 2015
56,000 people in more than 30 countries
GKN Driveline
The world leading supplier of
automotive driveline systems
and solutions.
2015 - Sales by division
Other
(0%)
£42m
Land Systems
(9%)
£693m
Aerospace
Driveline
(33%)
£2,500m
(46%)
£3,548m
GKN Powder Metallurgy
One of the world’s largest
manufacturers of metal powder
and sintered components.
GKN Land Systems
A leading supplier of engineered
power management products,
systems and services.
Powder Metallurgy
(12%)
£906m
All group financial data in this document relates to 2015 unless otherwise stated. Figures are presented on a management basis.
GKN Overview Presentation 2016
2
Our strategy
Four strong
divisions
Creating long-term
shareholder value
Five strategic
objectives
Lead in chosen
markets
Growth target:
Above market
Growth
Leverage global
footprint
Technology driving
margin
Margin
Operational
excellence
BUSINESS
PERFORMANCE
ROIC
Target: 20%
Group target:
8-10%
Cash Flow
Sustain above
market growth
GKN Overview Presentation 2016
Increasing cash flow,
EPS and dividends
3
Key financial metrics
£8,000m
Sales
£7,689m
Margin
8.8%
£6,500m
£5,000m
FY
2011
FY
2014
FY
2015
FY
2012
FY
2013
FY
2014
Dividend
8.7p
25p
20p
FY
2013
FY
2014
FY
2015
£400m
Net Debt
£769m
£200m
£0m
FY
2011
FY
2012
FY
2013
FY
2014
£550m
£400m
FY
2015
FY
2012
FY
2013
FY
2014
FY
2015
20%
18%
16%
FY
2015
30p
FY
2012
£700m
FY
2011
ROIC
17.8%
FY
2011
Free Cash
Flow
£370m
FY
2013
11%
9%
8%
6%
FY
2011
EPS
27.8p
FY
2012
PBT
£603m
FY
2011
FY
2012
FY
2013
FY
2014
FY
2015
FY
2011
FY
2012
FY
2013
FY
2014
FY
2015
10p
7p
4p
£1,000m
£500m
£0m
FY
2011
FY
2012
FY
2013
FY
2014
FY
2015
Figures are presented on a management basis.
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GKN Aerospace – at a glance
16,700 employees
62 manufacturing
locations
14 countries
GKN Aerospace is a leading global tier one
supplier of airframe and engine structures, landing
gear, electrical interconnection systems,
transparencies and aftermarket services. It
supplies products and services to a wide range of
commercial and military aircraft and engine prime
contractors and other tier one suppliers.
Sales: £2.50bn
Includes 2 months of Fokker Sales £113m
GKN Aerospace
Sales by Customer 2015
GKN Aerospace
Sales by market 2015
£143m (6%)
Special
products
Airbus
20%
Others
22%
GKN Aerospace (excluding Fokker)
Sales by product 2015
25%
Military
Lockheed 3%
UTC
13%
Rolls-Royce 4%
Spirit 4%
Honeywell 4%
Snecma 6%
Boeing
11%
GE
13%
£1,128m
(47%)
Aerostructures
£1,116m
(47%)
Engine components
and sub-systems
GKN Overview Presentation 2016
75%
Commercial
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GKN Aerospace – Fokker Technologies
Acquisition completed 28 October 2015
Fokker increases scale of division by c20%
Enhances GKN market leadership and positions on key growth platforms
− No.2 Aerostructures Sales
− No.3 Electrical wiring systems
− Additional content on A350 and F-35
Extends global footprint
− China, Turkey, India & Mexico
Expands technology and product capabilities
Revenue by end-market
Services
Commercial
Revenue by customer
Dassault
3%
Landing Gear
5%
Airbus A350
Gulfstream
8%
Bombardier
25%
Other
22%
5%
25%
NHI
12%
30%
Military
16%
Business
Jets
Airbus
SABCA
9%
Services
21%
17%
20%
Sales by sub-division
Aerostructures
45%
Boeing
17%
Electrical
20%
Lockheed
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GKN Aerospace – world class product portfolio
AEROSTRUCTURES
ENGINE SYSTEMS
Fuselage,
wing, nacelle
& pylon,
Static &
rotating
structures
Inflight
opening
doors and
empennage
(tails)
Titanium
engine inlet
parts
GLOBAL
NO. 2
SPECIAL PRODUCTS
Transparencies
Ice protection
systems
Flotation
devices
Fuel tanks
GLOBAL
NO. 2
GLOBAL
NO. 1
LANDING GEAR
WIRING INTERCONNECT SYSTEMS
GLOBAL SERVICES
Helicopter
Landing Gear
Electrical
Wiring
Interconnection
Systems
(EWIS) for
aircraft &
aircraft engines
Availability
Services, MRO,
Conversion and
Completion for
Mature and
Legacy aircraft
Composite
load carrying
landing gear
components
(drag brace)
GLOBAL
NO. 8
GKN Overview Presentation 2016
GLOBAL
NO. 3
GLOBAL
BRAND
7
GKN Aerospace portfolio
Declining
Stable
Growing
$6-9
Revenue per Aircraft
million
A380
$3-6
million
$0-3
million
A330
F/A-18
Black Hawk
A350
B787
A400M
C130J
Commercial
JSF
A320
CH53-K
G650
HTF7000
B737MAX
B777X
Military
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GKN Aerospace - summary
Airbus A380
Key growth drivers
Commercial (75% of sales)
− Strong position on existing programmes
with increasing build rates from 2016/2017
Boeing 737 MAX
− New programmes ramping up
production – Boeing 787, A350
Military (25% of sales)
− Ending of older military
programmes (C17, F/A-18) will
present a headwind before new
programmes ramp up (F-35)
Airbus A350
F-35 Joint Strike Fighter
Good technology – aim to win new positions on growth programmes
Integration of Fokker proceeding well
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GKN Driveline – at a glance
26,300 employees
46 manufacturing
locations
23 countries
Sales: £3.55bn
GKN Driveline is the world’s leading supplier of
automotive driveline systems and solutions. As a
global business serving the leading vehicle
manufacturers, it develops, builds and supplies
an extensive range of automotive driveline
products and systems – for use in everything
from the smallest low-cost car to the most
sophisticated premium vehicle demanding
complex driving dynamics.
GKN Driveline
Sales by region 2015
Source: IHS Automotive, February 2016
GKN Driveline
Sales by customer 2015
GKN Driveline
Sales by product 2015
Other, 21%
Rest of
World
27%
Fiat
Chrysler,
14%
AWD & eDrive
Systems
40%
VW Group,
13%
Mitubishi
Group, 3%
Europe
36%
Tata, 5%
BMW, 5%
Americas
37%
CVJ Systems
60%
GKN Overview Presentation 2016
GM Group,
11%
Toyota
Group, 7%
RenaultNissan, 10%
Ford Group,
11%
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GKN Driveline - a complete driveline solution
Leadership in all major product lines
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GKN Driveline – summary
Key growth drivers
CVJ – unrivalled global footprint and increasing global platforms
AWD – increased content per vehicle and broadening customer base
− China is a special market for AWD growth
Well positioned to outperform global markets - targeting 2% above
Maintain margin above 8%
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GKN Powder Metallurgy – at a glance
GKN Powder Metallurgy comprises GKN Sinter
Metals and Hoeganaes. GKN Sinter Metals is the
world’s leading manufacturer of precision automotive
sintered components as well as components for
industrial and consumer applications. Hoeganaes is
one of the world’s leading manufacturers of metal
powder, the essential raw material for powder
metallurgy.
6,600 employees
32 locations
9 countries
Sales: £906m
GKN Powder Metallurgy
Sales by region 2015
Global PM Market Share
Hoeganaes
16%
GKN PM
18%
Others
38%
Sumitomo
9%
GKN Powder Metallurgy
Sales by customer 2015
Ford
9%
Sinter
Americas 43%
GM
7%
Hilite
5%
Sinter
Rest of world
8%
Fiat Chrysler 4%
Hitachi PM
6%
Other
59%
Schaeffler 4%
Linamar 3%
ZF Group 3%
Stackpole 2%
Ames 2%
Schunk 3%
Metaldyne 4% PMG
4%
Fine Sinter 5%
Miba 5%
Porite 4%
Borg Warner 2%
VW Group 2%
Bosch 2%
Sinter Europe
33%
>80% of sales to Automotive Sector
GKN Overview Presentation 2016
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GKN Powder Metallurgy - Automotive trends driving
Design for PM
Reduced Emissions
EPS (ELECTRIC
POWER STEERING)
Energy efficiency
Renewable energy
ALUMINIUM CARRIER
7+ SPEED TRANSMISSIONS
VVT
(CAM PHASING)
TRANSMISSION
GEARS
VARIABLE VANE
PUMPS
START/STOP
Lightweight
Fuel efficiency
GKN Overview Presentation 2016
Electrification
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GKN Powder Metallurgy – summary
Key growth drivers
Value of PM content per vehicle outgrowing market
− Continued market growth in Europe and North America with accelerated growth
in India and China
− Increasing penetration in industrial markets
Unique parts and powder position supports rapid exploitation of “Design
for PM”
Additive layer manufacturing / 3D printing – complementary process and
investing in high technology powders eg. alloyed tool steels, nickel based
alloys, stainless steel and titanium
Targets growth of 2% above market with continued margin expansion
GKN Overview Presentation 2016
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GKN Land Systems – at a glance
5,000 employees
GKN Land Systems is a leading supplier of power
management products and services. It designs,
manufactures and supplies products and services for
the agricultural, construction, mining and utility vehicle
markets and key industrial segments, offering
integrated powertrain solutions and complete inservice support.
23 locations
10 countries
Sales: £693m
GKN Land Systems
Sales by market 2015
GKN Land Systems
Sales by Region 2015
Rest of
World 4%
Construction
& Mining
12%
Americas
20%
GKN Land Systems
Sales by customer 2015
John Deere 9%
Agriculture
45%
Case New Holland
Structures
9%
Tata 6%
Caterpillar 4%
Automotive
10%
Other
62%
Claas 4%
Agco 3%
JCB 2%
VW 1%
Europe
76%
Industrial
24%
GKN Overview Presentation 2016
Toyota Group 1%
Agri-Italia/Carraro 1%
16
7%
GKN Land Systems – integrated Powertrain
components
Clutches
PTO shafts
Gearboxes
World no 1 global supplier of agricultural power take off
shafts and high speed primary driveshafts
A leading global supplier of clutch and brake solutions
A leading global supplier of off-highway wheels
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GKN Land Systems - summary
Key growth drivers
Continued “industrialisation” of agriculture and urbanisation provide good
underlying market fundamentals
Leveraging customer relationships to increase content per vehicle
Geographic and product expansion – China and North America
Exploit Group technology and develop market leadership in electro mechanical
power management
Targeting organic growth above global market; margin currently depressed due
to weak agricultural equipment and construction markets
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GKN summary
Well positioned to deliver sustainable growth
Delivering shareholder value through a balance of:
Growth
Growth in excess of the markets
Improving margins
Financial
Metrics
Return on invested capital
Increasing cashflow and dividends
ROIC
Margin
Additional growth through strategic,
bolt-on acquisitions - adding capability,
market position and global footprint
Cash Flow
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Disclaimer
Cautionary statement
This presentation contains forward looking statements which are made in good faith
based on the information available at the time of its approval. It is believed that the
expectations reflected in these statements are reasonable but they may be affected
by a number of risks and uncertainties that are inherent in any forward looking
statement which could cause actual results to differ materially from those currently
anticipated. Nothing in this document should be regarded as a profits forecast.
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