Building Global Leaders
GKN overview - May 2011
Strategic goals
Building a portfolio of market leaders with:
leading market shares in chosen segments
above market growth in each division
margins expanding through the target ranges
technology leadership - engineering for the future
Sales by region
Sales by division
Other
£699m
Driveline
45%
£2,433m
£949m
Asia
17%
Europe
45%
Land
Systems
13%
Aerospace
27%
£1,451m
Americas
38%
Powder
Metallurgy
14%
£2,049m
£759m
Total 2010 sales £5,429m
GKN overview - May 2011
£2,431m
2
Global positioning
40,000 employees in over 30 countries
GKN overview - May 2011
3
GKN Driveline
From driveshaft to driveline – repositioned globally
2010 sales by region
Asia
35%
Unrivalled capability – global no 1
Europe
38%
Americas
27%
2010 sales by customer
Tata
2%
Geely/Volvo
1%
VW
15%
Other
17%
Suzuki
2%
Renault Nissan
12%
Hyundai Kia
2%
Honda
2%
PSA
3%
BMW
4%
Fiat Chrysler
10%
Mitsubishi
6%
Ford
8%
Toyota
8%
GKN overview - May 2011
GM
8%
4
GKN Driveline
Global leader in driveline systems and solutions
Global supply:
CVJ sideshafts
54 million units
Propeller shafts
2.4 million units
Torque management
1.5 million units
Geared products
1.2 million units
Manufacturing footprint:
44 locations in 21 countries
Engineering centres:
R&D: Germany, North America, Japan
14 product and application centres
Employees: 20,500
Source: GKN Driveline estimates
GKN overview - May 2011
5
GKN Driveline sales by product segment
CVJ Systems (sideshafts)
CVJ Systems
AWD Systems
Used on >80% of light vehicles
Transaxle Solutions
Global market leader with
around 42% share
eDrive Systems
AWD Systems/Trans Axle Solutions
AWD/4WD is 13% of market
2010
£2.4bn
Differentials on 100% of vehicles
Broad range of products,
technology and competition
eDrive Systems
Nascent market segment
Long-term growth expected
Product development focus
Source: GKN directional estimate; 2010 sales total, 2011 budgeted segment sales.
GKN Freight Services incl. in CVJ Systems
GKN overview - May 2011
6
Global light vehicle growth
100.0
90.0
80.0
CAGR
2010 - 2014
Vehicles (millions)
70.0
60.0
50.0
40.0
RoW
Developing
Developed
5.4%
9.0%
4.0%
Global
5.9%
30.0
20.0
10.0
0.0
2007
2008
2009
2010
2011
2012
2013
2014
Source: IHS Automotive Forecast, January 2011.
GKN overview - May 2011
7
Driveline – summary
Key growth drivers
Outperformance of the global CVJ business
Market growth in North America, China, India and Brazil
Broadening customer and product base in AWD and Trans Axle products
New product opportunities for drivetrain electrification
China as a special market in which to grow our presence
Strong relationships with customers underpin sustainability
Bolt-on acquisitions - focus on AWD and eDrive Systems
Exceptionally well positioned to outperform global markets
Targeting 2% to 3% outperformance relative to market
Move rapidly into target margin range of 8% to 10%
GKN overview - May 2011
8
Building Global Leaders – Powder Metallurgy
Hoeganaes
Powder
production
Sinter Metals
Component
manufacture
220,000 tons of powder
per year
6 billion parts
per year
plenty of applications
US no 1 and
22% global share
World no 1
16% global share
GKN overview - May 2011
Customers
Over 3,000 customers
globally
75% automotive
9
Powder Metallurgy process
Powder Metallurgy (PM) is a highly cost effective method of producing complex,
high performance parts
Powder
manufacture
No 1 in US
Component
manufacture
No 1 in world
16% share
GKN overview - May 2011
10
Powder Metallurgy division
Total divisional sales by
region of origin
Sinter Metals global
market share
Sinter Metals sales by
customer
GKN
Sinter EU
38%
Non
Automotive
• Good progress to develop
balanced sales in the regions
• Absolute share in AP and SA still
modest, actions developed to
exploit opportunity
GKN overview - May 2011
• Top 8 cover more than 50%
of total market
• Top 20 customers cover 50%
of business
• 25% industrial customers
11
Accelerated trend towards design for PM
Efficient transmission
Reduced emissions
Energy efficiency
Driving dynamics
Industrial
Electrification
New products and
design for PM
increase to c.40%
of sales in 2015
GKN overview - May 2011
12
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
Bolt on acquisition potential to strengthen global positioning
and new technology
Powder Metallurgy division set to grow 2%-3% faster than
market with continued margin expansion
GKN overview - May 2011
13
Land Systems
Exploiting GKN capabilities
2010 revenue:
£699m
2015 target
revenue: £1.5bn
Power
Management
(sales £190m)
High
Performance
Structures
(sales £253m)
Aftermarket
and Services
(sales £256m)
GKN overview - May 2011
14
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
GKN overview - May 2011
Leading European
supplier of implement
attachment systems
15
Products for agriculture machinery
Clutches
PTO shafts
Wheels
Gearbox
applications
GKN overview - May 2011
Hydromech Transmission
Clutch
applications
Gearboxes
PTO shaft
applications
16
Land Systems
Major supplier to agricultural and construction equipment
manufacturers
Sales by market
Sales by region of origin
Sales by customer
Other
63%
Construction/
Mining
11%
Industrial
20%
Commercial
vehicles/cars
32%
Deere
8%
Americas
23%
RoW
4%
CNH
6%
Europe
73%
Tata
6%
Agriculture
37%
Cat
4%
Claas
3%
Daimler
JCB
2%
2%
GKN overview - May 2011
VW
2%
Agco
2%
Ford
2%
17
Clear long-term market trends and drivers….
Growing population,
urbanization,diet
change, global warming,
changing global threats
Changing
military
environment
Scarcity of
resources, land,
water, oil
Increased mass
transport
Renewable
energy
GKN overview - May 2011
18
Land Systems - summary
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
GKN overview - May 2011
19
GKN Aerospace
A leader in composites and lightweight structures and a
substantial part of the Group
No 1 in Europe
Proven competitiveness
Strategic partner
Sales and margin development
Shipset values
Major new programmes
UCAS – partnership with
Northrop Grumman
13%
1.6
9
1.4
11%
1.2
9%
1.0
7%
0.8
5%
0.6
3%
8
£bn
7
6
5
4
3
2
1
1%
0.4
2003
2004
2005
2006
Sales
2007
2008
2009
0
2010
Margin %
Filton Acquisition Jan 2009
GKN overview - May 2011
20
GKN Aerospace
Market
Business
mix
Sector
Customer base
GKN overview - May 2011
GKN Aerospace – world class product portfolio
Composites
Metallic
structures
Engine
products
Nacelles
Canopies and
transparencies
F/A-22 Titanium
Aft Boom
Exhaust systems
Gulfstream G100/G150/
Dassault Falcon 50EX
A400M Composite
Wing Spar
A330 Trent
700 Fan
Cowl Door
Main Landing Gear
Beam Assembly
Canopies and
windshields for military
applications
Fan modules
GEnx Composite Fan Case
Fan
blades
F-135 Fan Inlet Case
GKN overview - May 2011
F-35 JSF Titanium
Bulkhead
B787 passenger
windows
Bombardier Dash 8 - 400
22
GKN Aerospace – well positioned for the future
Blackhawk
*
A400M
B747-8
*
F18
F-35
V22
*
C130J
C17
HTF7000
A380
*
*
*
A350
B787
*
A330
A320
*
1
* Life of programme
GKN overview - May 2011
*
*
CH53-K
2
3
4
5
6
7
8
Significant proportion of life of programme
(Ship set values $m)
23
Strong programme base
£m
Aerospace
A400M
JSF
1,700
B787
A350
Blackhawk
1,400
F18
1,100
B777
C130J
F15
B737
A380
A330/340
800
A320
~0
~0
2011
GKN overview - May 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 overview - May 2011
25
Summary - Aerospace
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 overview - May 2011
26
GKN summary
Well positioned to deliver sustainable growth following the
completion of significant restructuring initiatives
Delivering value through
Growth in excess of the markets
Improving margins
Strong cash generation
Additional growth through strategic, bolt-on acquisitions with the
purpose of adding capability, market position and global footprint
GKN
GKN overview - May 2011
Delivering Sustainable Growth
27
Building Global Leaders
GKN overview - May 2011