GKN plc Overview
21st November 2012
Strategic Goals
Building a portfolio of market leaders with:
leading market shares in chosen segments
above market growth in each division
margin expanding through the target ranges
technology leadership – engineering for the future
2011 - Sales by region
2011 - Sales by division
£1,003m
£885m
£2,795m
£2,232m
£1,481m
£845m
Total 2011 Sales
£6,112m
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£2,877m
Global Positioning
As of 1 Oct 12: Nearly 50,000 employees in over 35 countries
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[Nov 12 Investor Briefing]
GKN Driveline
From driveshaft to driveline – repositioned globally
2011 sales by region
Asia
31%
Unrivalled capability – global no 1
Europe
40%
Americas
29%
2011 sales by customer
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GKN Powder Metallurgy
2011 sales by region
0%
Sinter - Rest
of world
7%
Hoeganaes
17%
Sinter
Americas
38%
Sinter
Europe
38%
2011 sales by customer
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Land Systems
2011 sales by market
Market Leading
Positions
2011 sales by customer
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GKN Aerospace
£2.2bn International Aerospace Enterprise
35 sites - 12,000 people
GKN Aerospace
North America
GKN Aerospace
Europe
GKN Aerospace
Engine Systems
Aerospace North America
Aerospace Europe & Special Products Group
Aerospace Engine Systems (Volvo Aero)
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Marcus Bryson
CEO
GKN Aerospace
GKN Aerospace
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GKN Aerospace – Previous Key
key growth
Growthevents
Events:
St Louis-2002
Secure military position
Major Boeing Military relationship
Pilkington Aerospace-2004
Secure Military Transparency leadership
Stellex-2005
Complimentary to St. Louis
Boeing Commercial position on B787
Teleflex-2007
Extend to engine hot section
Secure major GE relationship
Rolls-Royce Composite Fan Blade JV-2008
Positioning for Next Gen Single Aisle
Strategic Partnership with RR
Filton-2009
Major capability expansion and A350 position
Strategic position with Airbus
Volvo Aero-2012
Engine system engineering and manufacturing addition
Strategic partnerships with all engine OEM’s
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[Nov 12 Investor Briefing]
GKN Aerospace – Strong sales and margin delivery
• Newly acquired Volvo Aero expected 2012 sales of £670m
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GKN Aerospace – World class product portfolio
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Airframe and special product portfolio
Winglets
Wing Leading & Trailing
Edge Assemblies
Integrated Floor
Structures
Vertical/Horizontal
Tail Planes
Composite Fuselage
Structures
Commercial &
Military
Commercial
Military
Wing Structures
& Surfaces
Metallic Fuselage
Structures
Canopies &
Windows
Nacelle Systems
Ice Protection for
Wings & Engines
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[Nov 12 Investor Briefing]
Fuel & Flotation
Systems
GKN engine product portfolio
Commercial &
Military
Commercial
Military
Composite &
Metallic Fan
Blades
Blisks/IBR’s
Diffusers
Turbine Casings
Exhaust
Systems
HPIP Structures
Composite & Metallic
Fan Cases
Tail Bearing
Housing
Composite
Fan Inlet Frame
Inner Core
Fairings
Compressor
Cases
Engine Ducts
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Compressor & Turbine
Vanes & Blades
Newly Acquired Volvo Aero engine product portfolio
Commercial &
Military
Commercial
Military
Shafts
Combustor
Structure
Compressor
Rotors
Turbine Structures
Metallic
Fan/Compresor
Cases
LPT Cases
Fan/Compressor
Structures
Guide Vanes
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Technology – Targeted innovation
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Acquisition of Volvo Aero
Volvo Aero acquisition – transaction overview
Excellent strategic fit
Strong financial rationale
Enterprise Value SEK 6.9bn (£633m)
− Consideration of £513m
£140m equity placing (c.5%) and 10year £450m bond
6.3x expected 2012 Volvo Aero
EBITDA
Creates a market leader – No.3 in
engine components
Business has invested heavily to
secure positions on new engine
programmes
Combines complementary product and
technology focus
0.9x expected 2012 sales of £670m
Expect in first full year*
− Accretive to management EPS
− Margin to meet GKN Aerospace target of
11-13%
− Generate ROIC above GKN’s WACC of
12%
Access to well-respected engineering
capability
Creates a balanced GKN Aerospace –
structures and engine products
Strengthens and broadens OEM
relationships.
Value enhancing acquisition for GKN
Note: £1 = SEK10.9
* Nothing in this presentation is intended to be a profit estimate for any period or a forecast of future profits and statements relating to earnings accretion should not be
interpreted to mean that the earnings per GKN share for the current or future financial periods will necessarily match or exceed its historical published earnings per share.
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[Nov 12 Investor Briefing]
Volvo Aero – leading producer of aero-engine components
Designs, engineers and manufactures
components and sub-assemblies for
aircraft engine turbines
Invested heavily to secure positions on
new engine programmes – £290m over last
4 years
Key customers are all the major aero
engine manufacturers
Positions on most major civil aerospace
platforms – will benefit as build increase
Employs some 3,000 people,
including 500 engineers
Risk and revenue sharing partner (RRSP)
business model, provides life-ofprogramme participation
Based in Sweden, Norway and USA
Significant aftermarket content providing
profitable long-term revenue streams
Focus on civil aerospace
High-quality customer base
Sales of c.£600m in 2011
Government, 14%
Source: FY11, Management
information, excludes rental income
Note: MTU represents joint
programmes with PW
Source: FY11, Management information, excludes rental income
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[Nov 12 Investor Briefing]
Combination of complementary technologies
Volvo Aero: Lightweight metallic
GKN: Composites
New technologies
High performance structures
−
Optimised fabrication
−
Composite fan blades (JV with Rolls-Royce)
−
Weld simulation
Composite fan cases
−
Automated laser welding
Advanced manufacturing
−
Metal deposition
− Advanced fibre placement
Advanced machining and automation capabilities
could be transferred to GKN US sites
Environmental technology
Additive layer technology good match to GKN’s
current development
Multifunctional technologies
− Winglets
− Electro-thermal ice protection
GKN: Composite fan blades
Volvo Aero: Compressor rotors
Volvo Aero: Turbine structures
GKN: Composite fan frame
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[Nov 12 Investor Briefing]
Transaction strengthens GKN Aerospace
GKN Aerospace product and market mix
OEM Relationships
Sales before £1.5bn
Sales before
Sales pro forma £2.1bn
Sales pro forma
Other 7%
Government, 4%
Balanced business
Increased civil
2011 data. Source: GKN Aerospace 2011 results, 2011 Volvo Aero internal financial information (excludes rental income)
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Broader customer mix
A leading business with high-quality revenue streams
GKN Group trading profit1
GKN Group sales
Before
Before
Pro forma
Pro forma
Greater aerospace contribution
2011 data. Source: GKN 2011 management information, Volvo Group 2011 Annual Report
1 Trading profit excluding corporate costs and impact of Gallatin
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Summary – GKN Aerospace
Proven track record of growth and margin progression into 11% 13% range
Strong position on existing programmes with increasing build rates
New programmes now set to ramp-up production
Technology development remains a focus and is positioning GKN
for future programmes
Filton acquisition and integration very successful and A350
capabilities now being proven
Volvo Aero brings strong engine component technology and good
positions on most engine programmes
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