GKN Aerospace
Making things fly
Marcus Bryson | CEO, GKN Aerospace and Land Systems
Disclaimer
Cautionary statement
This presentation contains forward looking statements which are made in good faith
based on the information available to 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.
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
GKN Aerospace
$3.5 billion International Aerospace enterprise
35 sites, 12,000 people
Marcus Bryson
CEO
GKN Aerospace
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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GKN CAPITAL MARKETS DAY – 21 MAY 2013
GKN Aerospace – Making things fly
Lead in
chosen
markets
Building stronger strategic relationships
New customers
Excellent
customer
relationships
Leverage
global
footprint
Develop more business in Asia and Americas
Extend global value chain
Customer proximity
Globalise
our business
Technology
driving
margin
Innovation in key products
Process innovation
Partnering with customers on unique technologies
Deliver
customervalued
innovation
Operational
excellence
Improve safety performance
Class leading cost, quality, delivery
Fully implement Lean in whole value chain
Values – walking the talk
Safe, lean
operations
Sustain
above market
growth
Increasing share with current customers
Partnering on new programmes
Bringing new technologies to market
Successful acquisitions
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
17% CAGR
achieved
2005-2013
GKN Aerospace – Markets and customers
Market
Business
Mix
Sector
Customer Base
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
GKN Aerospace – World class product portfolio
Aerostructures
Engine structures
Special
products
53% of Sales 2012*
42% of Sales 2012*
5% of Sales 2012*
Wing
Fuselage
Nacelle and
Pylon
Engine Systems and Services
Engine structures
Engine rotatives
Transparencies
and Protection
Systems
J-UCAS Fuselage
A380 Fixed Trailing Edge
B747-8 Exhaust
B787 Anti-icing System
A350XWB Rear Spar
CH53K Aft Fuselage
A400M Engine Intake
V22 Fuel Tanks
A330 Flap Skins
B767 Winglet
B787 Cabin Windows
B787 Inner Core Cowl
B787 Floor Grid
Full Engine MRO and support
HondaJet Fuselage
Ariane 5 Exhaust nozzle
Note: * Engine Systems proforma 12 months of 2012
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
F35 Canopy
Well balanced portfolio
Sales by market 2012
Customer sales E2013
Military
Commercial
30%
70%
Military split
US
87%
Europe
13%
Note: Engine Systems proforma 12 months of 2012
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Market outlook
Large commercial aircraft – record
order backlog (8,500 aircraft, >$1
trillion).
World passenger traffic growth 2012 – 2032
30,000 aircraft forecast to be delivered
2013 to 2032
Civil rotorcraft and large business jets
– markets strengthening
Source: Airbus
Worldwide defence spending remains
subject to budget cutbacks
Aircraft production 2003 to 2022
c 25% military
Latest forecast growth rates –
2013 to 2018:
− Civil: 3% to 4% CAGR
− Military: Flat near term; Future uncertain
Notes: (2013$) Source: Teal Group
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Market drivers bringing opportunities
Drivers
Requirement
Solution
Engine
technology
changes –
Fuel price
Noise
legislation
Increasing
passenger travel
in emerging
markets
Higher fuel
efficiency
hotter cores,
lighter fans
Better noise
attenuation
New materials –
composite
fans/cases,
titanium
replacing
composites
Increasing
demand for
aircraft
Airlines
renewing
fleets
sooner
GKN opportunity
GKN technology
composite fans and
cases for future large
aircraft
Strong position on
geared turbo-fan
Specialist titanium
engine structures for
next generation engines
Winglets and future
wings
Light weight composite
Increased new aircraft
sales
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Civil market dynamics – Positive trend
A320: neo Launch; Rate increase
B737: MAX Launch; Rate increase
A350/B787: Production ramp-up
A380/B747: Stable
MRJ/C-Series/MS21: Market entry
A330: Rate increase; 777 & upgrade
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Military market – On the right platforms
F-35 JSF
Rate Readiness phase
A400M Atlas
Moving to production
C130J
F15
FMS / Saudi
US multi-year
and FMS
V22
Multi-year
F18 Super Hornet
Rate Stable
Blackhawk
US multi-year
and FMS
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Next generation military platform opportunities
X-47B Unmanned Combat Air
System - Demonstrator
Unmanned Carrier Launched
Surveillance & Strike (UCLASS)
Heavy Lift Assault/Transport
Rotorcraft (CH-53K)
Armed Aerial /Joint MultiRole Helicopter
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
NewGen Trainer
(T-X)
Long Range Strike Mission
GKN Aerospace – well positioned for the future
Ship set values $m
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Technology – Targeted innovation
Future product differentiation
Future wing
technologies
Advanced
fuselage
Nacelle, pylon
and exhaust
Engine
structures
Engine
rotatives
Next generation
composite processes
Advanced
metallic processes
Advanced process development
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Transparencies
and coatings
Ice protection
systems
GKN technology is underpinning our future
New wing concepts
− High performance structural
concepts
− Laminar flow enabling technologies
− Morphing structures
Advanced materials and
processes
− Additive manufacture
− Advanced welding & fabrication
− Out-of-Autoclave curing
High-rate automation
− Robotic fibre placement
− Automated pick & place
− Rapid NDT
Creating a leadership position for the future
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
GKN Aerospace Engine Systems
Mike McCann | CEO
GKN Aerospace Engine Systems
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
GKN Aerospace Engine Systems
Formed through the acquisition of Volvo Aero, 1 October 2012
3rd largest Tier 1 aero-engine partner
OEM for the RM12 engine for the Gripen aircraft
European center of excellence for space turbines and nozzles
Small MRO facility for gas turbines and small engines
Components for
aircraft engines
and gas turbines
Military aircraft
engines
Sub-systems for
rocket engines
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Engine
services
GKN Aerospace Engine Systems
Trollhättan, Sweden:
1
HQ, engineering and
manufacturing
(c.2000)
Kongsberg, Norway:
2
2
Manufacturing
(c.450)
Linköping, Sweden:
Five sites in four countries
c.2600 employees
Trollhattan
including c.400 (Sweden)
– H.Q.
engineers
1
3
3
Kongsberg
(Norway) –
Mechanical
production
Linköping
(Sweden)
– Composites
Composites
(c.70)
4
Newington, CT(US):
Manufacturing
(c.100)
4
5
Bangalore, India:
Engineering
(c.30)
5
Connecticut (USA) – Large
components
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Banglalore (India) –
Product development
Leading designer and producer of aero engine structures
Well invested to secure new
engine programs: c.$460 million
over last four years
Commercial
LTA
24%
RRSP
59%
Positions on most major new Civil
Aerospace platforms
Risk & Revenue Sharing Partner
(RRSP) on many platforms;
provides Life of Program
participation
Significant aftermarket content
(c.30%) providing profitable long
term revenue streams
MRO
9%
Military/
Space
8%
Engine Systems Sales E2013
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
High quality customer base
Excellent complement to existing GKN Aerospace customer base
Partnerships with GE, Pratt & Whitney, Rolls Royce, Snecma and MTU
Engine Systems Sales E2013
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
GKN Aerospace Engine Systems market position
Aerospace market
Engine structure/module provider
marketshare
1%
2% 1% 1%
2%
3%
Aerostructures
20%
Engines
Avio
13%
MTU
30%
Nacelles
GKN
Avionics
12%
OEMs
Other systems
ITP
OEM's
IHI
KHI
17%
8%
18%
10%
5%
Source: CPMIL
c.$160bn market
MHI
Samsung
46%
Notes: Avio – Pending GE acquisition
Source: CPMIL
Tech Aero
c.$18bn market
Number 3 independent engine structure/module provider
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Aero engine market
Annual aero engine production value
Source: Teal Group
3% to 4% aero engine market CAGR projected (2012 to 2021)
Single aisle and wide body jet engines c.70% of market value
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Extensive portfolio of engine platforms
CFM56
GE90
Trent XWB
(A320, B737)
(B777)
(A350)
PW1000
V2500
Trent 900
(A320)
(A380)
(C-Series,
MRJ)
RM12
PW1100
(Gripen)
(A320neo)
CF6
(B747, B767,
A310)
GEnx
PW2000
GP7000
(B757)
(A380)
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
(B787,
B747-8)
Engine Systems revenue growth
10,000
Genx (B787, 747-8)
9,000
GTF & XWB (A320neo, C-Series, A350)
8,000
V2500 (A320)
Sales (SEK m)
Snecma (B737, A320)
7,000
CF6 (B767, A330)
6,000
PW2000 (B757, C-17)
LM2500 (IGT)
5,000
MTU PW4000 (B767, B777)
4,000
RM12 incl. export (Gripen)
ES
3,000
Other
2,000
1,000
0
2012A
2013E
2014E
2015E
2016E
2017E
2018E
Secure long-term revenue
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Number of engines
New program ramp-up
P&W Geared
Turbo Fan (GTF)
GEnx
Family
Trent
1000
Trent
XWB 84K
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
F-135
Pratt & Whitney Geared Turbo Fan (GTF)
PW1200G (Linked to PW1500G)
EIS: 2017 Target
Engine rate: 60/year
PW1500G (RRSP)
EIS: 2017 Target
Engine rate: 110/year
PW1100G-JM (RRSP)
EIS: 2017 Target
Engine rate: 495/year
PW1700G (PW1200G Derivative)
EIS: est. 2019
Engine rate: 90/year
PW1900G (PW1500G Derivative)
EIS: est. 2017/2018
Engine rate: 140/year
PW1400G-JM (PW1100G Derivative)
EIS:2017 Target
Engine rate: 80/year
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
GKN aero engine portfolio
Nacelles and Inlets
(Attached to Fan Casings)
Fan blades
Compressor and
Turbine blades
Engine System/
Structure Design
Compressor
Disks and Blisks
Product Lifecycle
Management (Gripen RM12)
Combustor
Structure
LPT case
Nozzle and Exhaust Structures
FAN
COMPRESSOR
COMBUSTOR
TURBINE/EXHAUST
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Full Engine MRO
Leveraging complementary technologies
Light weight metallics
Light weight composites
New technologies
High performance structures
−
Optimized fabrication
−
−
Weld simulation
Composite fan blades
(JV with Rolls-Royce)
−
Automated laser welding
−
Composite fan cases
−
Metal deposition
Advanced automated manufacturing
−
Advanced machining and
automation capability
Fibre placement and tape laying
Out of autoclave curing techniques
Titanium additive layer technology
in production
Turbine structures
Compressor rotors
Composite fan frame
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Composite fan blades
Building a competitive business
GKN strategy:
Integration efforts on
or ahead of schedule
in all areas and
demonstrating good
initial results
On plan to achieve
3% to 4% synergy
commitment
Volvo Aero business
built largely on Risk
Revenue Sharing
Partnerships (RRSPs)
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GKN CAPITAL MARKETS DAY – 21 MAY 2013

Reduce operating
costs

Win new
business in more
competitive
market

Establish more
balanced
business model
(RRSPs vs. fixed
price business)
Engine Systems technology
Martin Wänblom | VP Business Development and Programmes
GKN Aerospace Engine Systems
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Personal perceptions about the acquisition
•
•
•
•
•
Being part of a larger aerospace Company
Understanding of the need for change
Well received by customers
Complementary business cultures
Focus on future growth
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Technology driving growth – Engines
GE9x
(Future)
P&W Geared Turbo Fan
Trent XWB
GEnx
Trent 1000
GP7000
Trent
900
Strong presence on new platforms
Independent – work with all OEM’s
Technologies which bring value
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Overview P&W GTF turbine exhaust cases
Platform approach – advanced fabrication solution for hot structures
Design methods and materials for high loads and high temperatures
Saves weight and improves design flexibility
MRJ
C-Series
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
A320neo
Design capability
OEM with complete engine system
lifecycle responsibility; RM12 for
the Gripen fighter
All relevant engineering disciplines
for full design and flight certification
responsibility
− Transferring engine thrust to
airframe
− Withstanding hot section
temperatures
European Centre of Excellence for
Ariane 5 space components for
Launcher
− Liquid oxygen and hydrogen
turbines
− Exhaust nozzles
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Process technologies
Additive manufacturing
Net shape technology development from
material supply through to qualification
Powder and wire fed laser and electron beam
processes
Advance metallic processes and materials
Laser welding
Linear friction welding
Advanced hole drilling and assembly
Hybrid machining
Advanced Ti process characterisation
High performance (cryogenic) machining
New materials development
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Combined GKN engine business – bringing it all together
Lead in
chosen
markets
Engine structures strategically targeted business segment
Leverage
global
footprint
16 manufacturing sites operating in six countries
Technology
driving
margin
Full design and build capability throughout the Engine
Operational
excellence
Bridging borders, facilities and technologies
Sustain
above market
growth
Engine market projected to grow 3-4% CAGR over next
five years
GKN number 3 world-wide
Range of industrial capability: lower cost (Mexico, SE US) to
higher technology
Advanced technology: additive manufacture; high fibre
deposition rate
Implementation of Lean principles throughout the Company
GKN Engine Systems positioned to outperform market growth
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
GKN Aerospace summary
Marcus Bryson | CEO, GKN Aerospace and GKN Land Systems
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Key drivers to medium term margin progression
• Volvo integration
• A350XWB – exit development phase, ramp-up
• B787 – production ramp-up
• F35 – production ramp-up
• Technology insertion in new platforms
• Cost base management
• Lean deployment throughout value chain
• Military budgets - C130J, C17
• Customer price pressure
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
GKN Aerospace summary
Growth c.2%
above market
Good position on existing
and new commercial
programmes
Margin range
11% to 13%
On the right military
platforms
GKN technologies bringing
customer value
Capital allocation
Effective make or buy
Balance between partnerships
and long-term agreements
Lean deployment throughout
value chain
ROIC
>20%
Business
performance
Strong cashflow
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Requires time to recover
Volvo Aero and new
programme investments