GKN
Delivering Sustainable Growth
GKN Aerospace
Marcus Bryson
GKN Capital Markets Day – 12 April 2011
Agenda
GKN Aerospace today
2010 achievements
2011 market trends and beyond
Technology differentiation
Emerging markets
Future growth prospects for GKN Aerospace
GKN Capital Markets Day – 12 April 2011
2
GKN Aerospace 2011
Market
Business
Mix
Sector
Customer Base
GKN Capital Markets Day – 12 April 2011
GKN Aerospace Global Footprint
9,100 Employees Worldwide
US
4,600
GKN Capital Markets Day – 12 April 2011
EU/Other
4,500
4
GKN Aerospace Organisation Today
Integrated
Aerostructures
Propulsion
Systems
Special
Products
65%
25%
10%
Focused business sector groups
Coordinated customer approaches
Common technology plan
Aftermarket 15%
GKN Capital Markets Day – 12 April 2011
5
Airframe and Niche Product Portfolio
Winglets
Wing Trailing and
Leading Edge
Assemblies
Integrated Floor
Structures
Vertical and Horizontal
Tail Planes
Composite Fuselage
Structures
Commercial
and Military
Commercial
Military
Metallic Fuselage
Structures
Canopies and
Windows
GKN Capital Markets Day – 12 April 2011
Nacelle Systems
Ice Protection
Wing and engine inlet
Fuel and Flotation
Systems
6
Engine Product Portfolio
Commercial
and Military
Commercial
Military
Composite
and Metallic
Fan Blades
Blisks/IBR’s
Diffusers
Turbine Casings
Exhaust
Systems
HPIP Structures
Composite and Metallic
Fan Cases
Tail Bearing
Housing
Composite
Fan Inlet Frame
Inner Core
Fairings
GKN Capital Markets Day – 12 April 2011
Compressor
Cases
Engine Ducts
Compressor and Turbine
Vanes and blades
7
History of Strong Sales and Margin Delivery
1.6
13%
Aerospace 9 Year Trend
(Actual Rates)
11%
1.2
9%
£bn
1.4
1.0
7%
0.8
5%
0.6
3%
*
0.4
2003
2004
2005
2006
Sales
2007
2008
2009
1%
2010
Margin %
* Filton Acquisition Jan 2009
GKN Capital Markets Day – 12 April 2011
8
Business Achievements 2010
New Customer Wins
General Atomic Predator
Lightweight fuel tanks
Dassault SMS
Wing T/Edge moveables
Eurocopter EC135
Fuel tanks
Fuji H.I.
B787 Components
Technology Collaborations
Boeing Commercial
Technology collaboration agreement
COMAC919
Ongoing dialogue
Programme Value Consolidation
Lockheed – JSF (CV)
Composites; machinings, tail hook
Airbus A350
Flaps (I/B & O/B) & Cabin Windows
Bombardier- C Series
Ailerons
Boeing 787 and 747-8
Thrust struts
Major LTAs
Rolls Royce
LTAs (T700 / T1000)
General Electric
LTA
P&W LTAs
(F135 / GP7000)
New business secured in excess of $1.5bn
GKN Capital Markets Day – 12 April 2011
9
Market Drivers
Shift in demand (20 year outlook)
Data Source: Boeing; Airbus
Commercial fleet growth
Additional 26,000 new aircraft – passenger and cargo (currently 19,000) –
value $3.2 trillion
77% will be outside of North America
34% Asia Pacific
GKN Capital Markets Day – 12 April 2011
10
Market Drivers
Environment
Pollutions
Civil Aircraft ~2% Global
Aircraft and Engine
Efficiency
Environment Impacts
Weight Reduction
Noise, Particulates, Gases
MITIGATION
Efficiency eclipsed by
increased traffic
Improved Operating
Procedures
Route Optimisation
Bio Fuels
Reduce emissions
per kilometre flown
Operators / Manufactures
GKN Capital Markets Day – 12 April 2011
11
Aero Structures - Market
Market Outlook
Steady growth
Healthy Airbus and Boeing
volumes – combined backlog
over 7,000 aircraft
GKN Market Positions
Leading tier 1 supplier of
wings
10 year CAGR (2019) = 4.9%
Global Value = $38bn
Primes
= c.$16bn
Tier 1
= c.$15bn
Fragmented (top 9 = c.60%)
Tier 2
= $7bn
Data Source: Airbus; Boeing; CMIL; GKN
GKN Capital Markets Day – 12 April 2011
12
Aero Structures - Composites and Titanium Markets
Composites Market
Titanium Market
Significantly increased growth
Increased growth
10 year CAGR (2019) = 12.7%
10 year CAGR (2019) = c.6.5%
Key drivers
Key drivers
B787; A350XWB; F35-JSF
B787; A350XWB; F35-JSF
Positives
Weight; strength; resistance (corrosion/
fatigue); fewer parts; increased
complexity
Fragmented market
Consolidate in line with high levels of
investment by key players (automation)
GKN Market Position
The leading first tier supplier
GKN Market Position
Top three first tier supplier (B787;F35)
Leading role on A350XWB
composite wing and A400M
GKN Capital Markets Day – 12 April 2011
Data Source: Airbus; Boeing; CMIL; GKN
13
Civil Market Dynamics - Positive Trending
A320/B737 rate increases
A330/B777 rate increases
A380/B787 production ramp
A350 in progress
C 919/ C Series progress
A320NEO / B747-8 launch
GKN Capital Markets Day – 12 April 2011
14
Military Market Dynamics - Neutral to Positive Trend
F35 JSF
Rate readiness phase
A400M Grizzly
Moving to production
F18 Super Hornet
Rate stable
C130J
Supported by multi-year
US and FMS
F15
FMS / Saudi
V22
Multi-year
FMS sustaining activity
Blackhawk
Multi-year continuation
GKN Capital Markets Day – 12 April 2011
15
Next Generation USG Military Platform Opportunities
Heavy Lift Assault/Transport
Rotorcraft (CH-53K)
Target Fielding: 2016
Customer: USMC
Carrier Based Unmanned
Strike/Reconnaissance
Target Fielding: 2018+
Customer: USN
GKN Capital Markets Day – 12 April 2011
NewGen Air Re-Fueling
Tanker (KC-46A)
Target Fielding: 2016
Customer: USN
Armed Aerial Scout
Target Fielding: 2018+
Customer: USA
Long Range Strike Mission
Target Fielding: 2020+
Customer: USAF
16
Technology Differentiation
Airbus A350
Integrated wing
Integrated wing trailing edge assembly
Design, development and productionisation
Auto fibre placement and automated assembly
Boeing 787
Wing leading edge ice protection system
Design, development and certification
Full ice performance analysis and test
Front Fan Case
Full load bearing structure
Single piece resin transfer
moulding
Integrated anti ice system
Over 650 design and stress engineers supporting international programmes
GKN Capital Markets Day – 12 April 2011
17
GKN Aerospace Technology Examples
Solutions
High
Performance
Structures
Advanced
Manufacturing
(High rate and
Lower Cost)
Composite Fan
blades
Advanced Fibre
Placement
Technology joint venture with Rolls-Royce
Delivers significant performance improvement
Projected to be £100m business per annum
 Areas of review for acquisition growth
New rapid manufacturing technology
Contract value over $1bn for A350
Further development potential for NGSA
Weight Reduction
Environmental
technologies
Winglets
Multifunctional
technologies
Electrothermal Ice
Protection
GKN Capital Markets Day – 12 April 2011
c.2% fuel burn saving
Unique technology selected for B767 and C Series
Over £100m business already contracted
First commercial aircraft application on B787
£150m+ life of programme contract
Future low power solutions being developed
18
Advanced Metallic Highlights
Advanced joining techniques for new product
opportunities
Welded pylon – concept study with Boeing planned
Friction stir welding – wing cover development underway
Near net shape technologies for improving material
utilisation, lowering manufacturing times and increasing
design freedom and flexibility
Electron Beam Additive Material – eBAM project underway with
Boeing and LM
Laser additive manufacture – partnership with EADS under
negotiation
Advanced material evaluation for improved performance
and manufacturing
Investigating advanced Al and Ti Alloys in conjunction with
material suppliers
GKN Capital Markets Day – 12 April 2011
19
Emerging Market Approach
Focused on China - on shore/offshore concept
Demand in China for new aircraft
Indigenous industry strategy – COMAC/XAC/AVIC
Potential collaborative supply chain partners
Strong existing GKN presence and understanding
COMAC C919
Collaborative Discussion
GKN Capital Markets Day – 12 April 2011
Established Supply
Chain Partnership
MA700 Future Turboprop
Opportunities
20
GKN Aerospace - Well Positioned for the Future
Blackhawk
*
A400M
B747-8
*
F18
F-35
V22
*
C130J
C17
HTF7000
A380
*
*
*
A350
B787
*
A330
A320
*
*
CH53-K
*
1
* Life of programme
GKN Capital Markets Day – 12 April 2011
2
3
4
5
6
7
8
Significant proportion of life of programme
(Ship set values $m)
21
Key Programme Drivers
800
27
New Growth Business
A400M
GKN £400m of new
growth in 2014
JSF
£m
400
195
17
145
60
B787
96
A350
2011
121
40
2012
2013
GKN Capital Markets Day – 12 April 2011
2014
2015
2016
2017
2018
22
Key Programme Drivers
Key Organic Base Programmes
800
£m
210
Blackhawk
F15
12
40
F18
31
84
456
C130J
B777
400
B737
A380
26
A330/340
60
427
A320
2011
GKN Capital Markets Day – 12 April 2011
2012
2013
2014
23
2014 Strong Programme Base
Aerospace
A400M
JSF
1,700
B787
A350
1,400
£m
Blackhawk
F18
1,100
B777
C130J
F15
B737
A380
A330/340
800
A320
500
~0
2011
GKN Capital Markets Day – 12 April 2011
2012
2013
2014
24
Changing shape of the business
Market Focus
Customer Focus
Boeing - Military
Others
Boeing –
Civil
Military
47%
Civil
53%
2010
BAE
Lockheed
UTC
Northrop
GE
EADS –
Airbus
Others
Military
38%
BAE
Boeing - Military
Boeing –
Civil
Lockheed
Civil
62%
2014
Northrop
UTC
GE
EADS –
Airbus
GKN Capital Markets Day – 12 April 2011
25
Summary
Proven track of growth and margin progression
Strong platform on existing programmes with increasing
build rates
New programmes now set to ramp up production
Technology development focused on positioning for future
programmes
Aero engines focus for capability development
Targeting compound sales growth of 8 to 10% for a number
of years and further margin expansion
GKN Capital Markets Day – 12 April 2011
26
GKN
Delivering Sustainable Growth
GKN Capital Markets Day – 12 April 2011