GKN
Delivering Sustainable Growth
GKN Land Systems
Andrew Reynolds Smith
Gerard Lavery
GKN Capital Markets Day – 12 April 2011
Agenda
Strategy objectives
Who we are
What has been achieved
Strategic growth drivers
A focus on electro-mechanical power management
Penetrating new markets
Summary
2
Strategic Objectives
Building a new world leader for GKN
Exploiting and developing GKN capabilities to drive
growth in existing and new attractive markets
Leveraging GKN group-wide technology
to drive growth across markets
Delivering through a world class
global operational capability
3
GKN Land Systems - Who We Are
Power
Management
High Performance
Structures
Aftermarket
and Services
4
Well balanced current profile provides
a good platform for development
Sales by Market
20%
Sales by Business
37%
£256m
£190m
Industrial
Agriculture
11%
Aftermarket
& Services
Power
Management
Construction
& Mining
Commercial
Vehicle /
Passenger Car
32%
Wheels & High
Performance
Structures
2010 sales: £700m M
£253m
5
Global footprint positioned to follow
customer and market trend
Revenue by
Geography
Stronger
growth in
emerging
markets
18%
Americas
 > 34 locations
3%
 > 15 manufacturingAsia
plants
 5000 employees
79%
Europe centres in key regions
 Technology
2005
2010
6
Global Customer Base
Agriculture
Construction
Mining
Military
Industrial
“Advancing Vehicle Efficiency and Environmental Sustainability”
7
Strong Premier Global Brands
Power Management and Structures
Aftermarket and Services
8
Market Leading Positions
Power Take Off (PTO) Shafts
Wheels
World no1 global supplier
of agricultural power
take off shafts
World no1 global supplier
of off-highway wheels
High Speed Shafts
Attachment Systems
World no1 global
supplier of high
speed primary
drive shafts
Leading European
supplier of implement
attachment systems
9
Revenues
Growth Across Markets Served of 5%
10
What Has Been Achieved – A Strong Platform
Plants and distribution centres rationalised
Rebalancing of geographical and market position
Aftermarket businesses consolidated
Exited from non core axles business
Market and customer focused organisation implemented
Global account management
Exploring and penetrating new markets
Restructuring completed…healthy margin recovery
11
Good Market Fundamentals, Trends and Drivers….
Growing population,
urbanisation, diet
change, global
warming, changing
global threats
Changing
military
environment
Scarcity of
resources, land,
water, oil
Increased mass
transport…
Renewable
energy…
12
The implications of key long term trends and drivers
Trends / Drivers
Implications
AG
Increased population
Changing eating patterns
Sophisticated farming
methods
CE
Urbanisation
Infrastructure development
High efficiency, reliable
power management
solutions
Raw material demand
Drive to low carbon
technology
Mining
Globalisation of markets
Transp’t.
Increased mass transit
Green
Energy
Energy costs / availability /
legislation
Rapid development in high
growth economies
Low lifetime operating
costs
13
GKN Land Systems Key Growth Drivers
Customer relationships
Technology
Through life support
Geographic expansion
New markets
14
Global Customer Relationship Leverage
AGCO
Massey
Ferguson
Valtra
CNH
Fendt
John
Deere
Case
New
Holland
OSHKOSH
Structures
Power management
Wheels
AMS services
15
Global markets develop with customers
aligning to higher growth economies
Deere, CAT, CNH, Gehl
Deere, CNH , AGCO
Deere,
GKN
CNH,
GKN
Volvo,
Terex,
CAT
Volvo
Manitou
CAT
JCB
GKN
GKN the only supplier positioned to serve
global customers
16
New Market Penetration
Understanding
new segments
Leveraging Group
technology
Defence
Driveline systems
for better mobility and
protection
Industrial
Industrial
Driveshafts for
bottling machines
Power
management
monitoring system
17
Focus on Lifetime Costs and Aftermarket services
North America
China
 43 service and
distribution centres
in place globally
 Further geographic
expansion
 Expand service
capability across
markets
18
Market Trends Driving Technology Evolution
Technology
Futuristic
Electrification
Complex technology
Solid technology
- High safety standard
- Driverless
- Data communication
- Higher speed
- Integrated solutions
- High efficiency
- Safety
- High comfort / safety
Basic technology
- Low horse power
- Low speed
- Safety not the priority
- Emission regulation
- High power
Emerging countries
- Electric drive
Developed countries
19
GKN Technology
Centered Double Cardan Joint
High working angle driveshaft for
higher mobility
New advanced sealing solution for
higher durability
Safety and Reliability
20
GKN Technology
Electric Implement Drive
Electric power for implements
High efficiency and reliability
Power and efficiency
21
A Focus Today On One Key Growth Theme…
Electro Mechanical
Power Management
(EMPM)
22
Electro - Mechanical Power Management
Clutch
Coupling
Gearbox
Driveshaft
Brake
POWER
APPLIED
POWER
SOURCE
Meeting future trends in the area of :
•
•
•
•
Efficiency and reliabilityControl
Energy saving and recovery
Electrification
Emissions
Actuators
Sensors
Increasing towards system integration and optimization
23
EMPM Strategic Review Defines Priorities…
Landscape - £50bn
Assessment Criteria
Market attractiveness and growth
Technology differentiation and evolution
Competitive landscape
Global supply base
EMPM focus areas - £6bn
Growth 7 – 8 %
24
EMPM Areas For Development
£6Bn
Defence
Mass
Transit
Agriculture
Construction
Renewable
Energy
Industrial
Brakes
Couplings
Clutches
Driveshafts
Gearboxes
Sensors
Actuators
Control
Integration
critical capability building
growth positioning
25
EMPM Current GKN Positioning
£6Bn
Defence
Mass
Transit
Agriculture
Construction
Renewable
Energy
Industrial
Brakes
Couplings
Clutches
Driveshafts
Gearboxes
Sensors
Actuators
Control
Integration
critical capability building
growth positioning
26
EMPM Current Position in Agriculture
Mechanics
Double-joints
CVT Transmission
Disconnect
Fan Clutch
PTO shaft
Shiftable Clutch
CVJ
Stop Clutch
PTO Generator
ICVD
Hybrid Drive
Motor/
Generator
Electric Drives
Control Unit
27
EMPM Current Position in Construction / Mining
28
EMPM Potential Future Positioning
£6Bn
Defence
Mass
Transit
Agriculture
Construction
Equipment
Renewable
Energy
Industrial
Brakes
Couplings
Clutches
Driveshafts
Gearboxes
Sensors
Actuators
Control
Integration
critical capability building
growth positioning
29
Wind Energy – A High Growth Sector
UK – the worlds largest offshore wind market
Offshore wind growing
faster than Onshore
EU
High technology demands
China
NA
30
EMPM - Efficient and Reliable Driveline
Gearboxes, Br
akes, Clutches,
Couplings and
Driveshaft
Sensors /
Controls
Composites
Renewable Energy
Technology Roadmap
Industry Driveline
Solutions
Integrated and optimised component / systems solutions….
31
Building Capability Through Acquisition
Complimentary technology
Unlocking Value
Strengthen position in target markets
New Capabilities
New Markets
Brands
Customer relationships
Distribution channels
Geographic expansion
Growth platform
2010
2015
“Creating a better value proposition”
32
Summary – A New World Leader for GKN
A strong market focused growth platform in place
Key growth drivers
Leverage customer relationships to expand in existing markets
Rapid geographic expansion
Moving into new markets – industrial and renewables
Development of aftermarket capability across markets
Exploit Group technology and develop market leadership in electro mechanical
power management
Targeting organic growth 3 to 4% above global market and expanding
margin into target range
Acquisition to build capability and secure £1.5bn revenue goal in 2015
33
GKN
Delivering Sustainable Growth
GKN Capital Markets Day – 12 April 2011