GKN
Overview and introduction
24 February 2015
Updated 25 March 2015
A Tier 1 Supplier to the major OE manufacturers in Automotive,
Aerospace and Land Systems markets
Global engineering group
Sales of £7.46 billion in 2014
51,400 people in more than 30 countries
GKN Driveline
The world leading supplier of
automotive driveline systems
and solutions.
2014 - Sales by division
Land Systems
(11%)
£776m
Other
(1%)
£94m
Driveline
(46%)
£3,444m
Aerospace
(30%)
£2,226m
GKN Aerospace
A leading first tier supplier to the
global aerospace industry.
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%)
£916m
All group financial data in this document relates to 2014 unless otherwise stated. Figures are presented on a management basis.
GKN OVERVIEW PRESENTATION 2015
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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 2015
Increasing cash flow,
EPS and dividends
2
Key financial metrics
£8,000m
Sales
£7,456m
Margin
9.2%
£6,500m
£5,000m
FY
2010
FY
2013
FY
2014
FY
2011
FY
2012
FY
2013
Dividend
8.4p
25p
20p
FY
2012
FY
2013
FY
2014
£400m
Net Debt
£624m
£200m
£0m
FY
2010
FY
2011
FY
2012
FY
2013
£550m
£400m
FY
2014
FY
2011
FY
2012
FY
2013
FY
2014
20%
18%
16%
FY
2014
30p
FY
2011
£700m
FY
2010
ROIC
17.7%
FY
2010
Free Cash
Flow
£234m
FY
2012
11%
9%
8%
6%
FY
2010
EPS
29.0p
FY
2011
PBT
£601m
FY
2010
FY
2011
FY
2012
FY
2013
FY
2014
FY
2010
FY
2011
FY
2012
FY
2013
FY
2014
10p
7p
4p
£1,000m
£500m
£0m
FY
2010
FY
2011
FY
2012
FY
2013
FY
2014
All group financial data in this document relates to 2014 unless otherwise stated. Figures are presented on a management basis.
GKN OVERVIEW PRESENTATION 2015
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GKN Aerospace – at a glance
12,350 employees
33 manufacturing
locations
7 countries
GKN Aerospace is a leading global tier one supplier of airframe and
engine structures, components, assemblies and transparencies to a
wide range of aircraft and engine prime contractors and other tier one
suppliers. It operates in three main product areas: aerostructures,
engine components and sub-systems, and special products.
Sales: £2.23bn
GKN Aerospace
Sales by market 2014
GKN Aerospace
Sales by product 2014
£139m (6%)
Special products
£1,045m
(47%)
Aerostructures
27%
Military
£1,042m
(47%)
Engine components
and sub-systems
GKN OVERVIEW PRESENTATION 2015
73%
Commercial
4
GKN Aerospace - strong customer relationships
GKN Aerospace
Sales by customer 2014
Other 22%
Airbus 21%
Spirit 3%
Honeywell 3%
UTC 13%
MTU 3%
Rolls Royce
4%
GE 13%
Boeing 12%
Snecma 6%
GKN OVERVIEW PRESENTATION 2015
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GKN Aerospace – world class product portfolio
Aerostructures
Global
#3
WINGS & FUSELAGE
47% of Sales 2014
Engine structures
NACELLE & PYLON
47% of Sales 2014
Global
#2
ENGINE SYSTEMS & SERVICES
Special
Products
Global
#1/2
6% of Sales 2014
Engine structures
B747-8 Exhaust
Transparencies and Protection
Systems
B787 Anti-icing System
A380 Fixed Trailing Edge
B767 Winglet
Engine rotatives
V22 Fuel Tanks
A400M Engine Intake
A350XWB Rear Spar
B787 Floor Grid
B787 Cabin Windows
Full Engine MRO and support
J-UCAS Fuselage
Ariane 5 Exhaust nozzle
GKN OVERVIEW PRESENTATION 2015
F35 Canopy
6
Commercial
GKN Aerospace - well positioned for the future
Military
Well positioned for the future
2014 Ship set values $m
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GKN Aerospace - summary
Key growth drivers
Airbus A380
Commercial (73% of sales)
− Strong position on existing programmes
with increasing build rates from 2016/2017
Boeing 737 MAX
− New programmes now set to ramp-up
production – Boeing 787, A350
Military (27% of sales)
− Ending of older military
programmes (C17, F/A-18) will
present a headwind before new
programmes ramp up (JSF)
Airbus A350
F-35 Joint Strike Fighter
Good technology – aim to win new positions on growth programmes
Successful integration of Volvo Aero; good track record on acquisitions
GKN OVERVIEW PRESENTATION 2015
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GKN Driveline – at a glance
25,650 employees
46 manufacturing
locations
22 countries
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.
Sales: £3.44bn
GKN Driveline
Sales by product 2014
AWD & eDrive
Systems
40%
GKN Driveline
Sales by customer 2014
Other, 24%
CVJ Systems
60%
VW, 15%
Fiat
Chrysler,
11%
Mitubishi
Group, 4%
Toyota
Group, 5%
Ford Group,
10%
BMW, 6%
Tata Group,
GM Group,
6%
9%
GKN OVERVIEW PRESENTATION 2015
RenaultNissan, 10%
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GKN Driveline - truly global footprint
GKN Driveline
Sales by region 2014
26%
Rest of
world
38%
Europe
36%
Americas
104
Global light vehicle
production trend
99
102
96
(Million vehicles)
93
90
Manufacturing plant
87
Joint Venture
Corporate office /
Engineering centre
2014
2015
2016
2017
2018
2019
2020
Source: IHS Automotive, February 2015
GKN OVERVIEW PRESENTATION 2015
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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 within the target range of 8% to 10%
GKN OVERVIEW PRESENTATION 2015
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GKN Powder Metallurgy – at a glance
6,900 employees
34 locations
10 countries
Sales: £916m
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.
GKN Powder Metallurgy
Sales by region 2014
GKN Powder Metallurgy
Sales by customer 2014
Hoeganaes
16%
Sinter
Rest of world
8%
Ford
9%
GM
6%
ZF 4%
Fiat Chrysler 4%
Sinter
Americas
41%
Hilite 4%
Schaeffler 3%
Borg Warner 2%
Linamar 2%
Other
62%
VW Group 2%
Means Ind 2%
Sinter Europe
35%
80% of sales to Automotive Sector
GKN OVERVIEW PRESENTATION 2015
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GKN Powder Metallurgy - accelerated trend towards design for PM
Key growth drivers
Fuel efficiency
Reduced emissions
Electrification
Weight and space saving
Automotive products
P-Rotor Pump components
Differential gears
Torque converter
Global PM Market Share
Variable Valve Timing components
Magnetic clutches
Electrical Power Steering Parts
GKN OVERVIEW PRESENTATION 2015
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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 accelarated growth
in India, Brazil 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
GKN Powder Metallurgy targets growth 2% above market with continued
margin expansion
GKN OVERVIEW PRESENTATION 2015
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GKN Land Systems – at a glance
5,200 employees
36 locations
15 countries
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 in-service support.
Sales: £776m
GKN Land Systems
Sales by Region 2014
GKN Land Systems
Sales by market 2014
GKN Land Systems
Sales by customer 2014
Asia, 3%
John Deere 9%
Industrial
23%
Americas,
21%
Other
62%
Case New Holland
8%
Tata 5%
Caterpillar 4%
Claas 4%
Automotive
18%
Agriculture
45%
Agco 3%
JCB 2%
VW 1%
Toyota Group 1%
Europe,
76%
Construction &
mining 14%
GKN OVERVIEW PRESENTATION 2015
Agri-Italia/Carraro 1%
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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
GKN OVERVIEW PRESENTATION 2015
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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 and margin range of
8-11% - currently below target due to depressed agricultural equipment
markets
GKN OVERVIEW PRESENTATION 2015
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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
GKN OVERVIEW PRESENTATION 2015
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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.
GKN OVERVIEW PRESENTATION 2015
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