GKN Driveline
Business overview and strategy
Steve Markevich | CEO GKN Driveline
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 Driveline – An excellent global footprint
GKN Driveline
end-2012
£3.24 billion
Sales
U.K.
France
Spain
Italy
Slovenia
Turkey
United
States
c.22,000
Employees
45 Plants
22 Countries
Sweden
Poland
Germany
South
Korea
Japan
China
India
Mexico
Thailand
Manufacturing plant
Singapore
Colombia
Taiwan
Malaysia
Joint Venture
Corporate office /
Engineering centre
Brazil
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Australia
GKN Driveline performing as the market leader
Delivering on a commitment
Clear and compelling strategy
Integrated Getrag AWD into Driveline
Technology roadmap aligned to market needs
Global customers with strategic relationships
Selective wins with pricing discipline
Prioritised investments
Integrated global network
− people, process, systems, standards, etc.
Creating distinct competitive advantage
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Sales growth above market
3,500
3,000
Driveline sales £m
180
Acquisition of Getrag
Driveline in Q4, 2011
160
140
2,500
120
2,000
100
80
1,500
60
1,000
40
500
20
0
0
2007
2008
2009
2010
2011
Organic growth of c.5% above market driven by:
− Leading positions and share gains in growth markets
− Global customer mix and premium brands
− Increasing share and content of AWD
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
2012
Global light vehicle
production index
(2007 = 100)
Unrivalled driveline product and systems capability
Market leader in CVJ sideshafts and AWD systems
Future hybrid and electric drivetrains
CVJ Systems
All-Wheel Drive
61% of
Sales
39% of
Sales
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Leading positions in our core product segments
CVJ Sideshafts
GKN
NTN
Nexteer
Hyundai WIA
Wanxiang/Neapco
Propshafts
GKN
Dana
IFA Rotorion
American Axle
JTEKT
AWD PTU/FDU
AWD Couplings
Performance Diffs
Electric Axle*
GKN
JTEKT
GKN
GKN
Magna
BorgWarner
Eaton
Magna
Dymos
GKN
American Axle
American Axle
Hyundai Wia
Honda
Dana
BorgWarner
American Axle
Magna (inc. WIA JV)
JTEKT
Linamar
Source: GKN estimated rankings on 2013 basis; excludes in-house.
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
*Emerging product segment
Balanced global footprint with excellent regional balance
Sales by region of origin 2012
Sales growth by region
Europe
•
Customer mix
•
Export demand
•
AWD acquisition
£m
919
2010
1105
1196
2011
2012
Asia
29%
Europe
37%
Americas
34%
Americas
•
NA market strength
•
CVJ share gain
•
AWD acquisition
•
Brazil slowed by
vehicle imports
1115
£m
Asia
•
Strong growth in China
•
Japan weaker
£m
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
668
815
2010
2011
2012
846
875
925
2010
2011
2012
Operational excellence on a global scale
Global best practices
Simplifying global supply chains
Mexico
Relentless focus on waste reduction
World class quality disciplines
Defect parts per million (ppm)
19
14
2007
China
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
2008
10
2009
7
6
5
2010
2011
2012
Expanding capability for high growth markets
CVJ – Key
investments
Mexico
Poland
Russia
China
Sideshaft capacity
expansion and new forge
Sideshaft capacity
expansion.
Under review.
Sideshaft capacity
expansion.
Add propshafts
AWD – Investment
supports global
growth
India
Ramp-up new Pune plant
and expand Oragadam.
United States
Propshaft capacity
expansion. New 4WD
FDU supply.
Thailand
Italy
Sideshaft capacity
expansion.
AWD and eDrive
capacity expansion
Add propshafts and 4WD FDUs
Sweden
AWD capacity
expansion
China
Extension of SDS JV
to AWD and eDrive
products
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Full driveline capability in China
SDS JV now includes AWD and eDrive Systems
GKN Torque Shanghai now part of SDS
Participating in rapidly growing SUV and AWD market
Expanding local engineering capability
GKN Driveline sales
(China with SDS at JV share)
8 manufacturing plants
3,800 people
297
£m
209
232
GKN/SDS locations
2010
2011
OEM plant locations
2012
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Well positioned with global customers and platforms
Sales by customer 2012
Others, 20%
Volvo Car Geely, 4%
VW Group,
15%
RenaultNissan, 11%
JLR-TATA,
5%
GM, 10%
Mitsubishi, 5%
BMW, 4%
Toyota, 6%
FIAT Ford, 10%
Chrysler,
10%
Footprint aligned with customer needs
Strategic relationships with early involvement
Value of global reach and scale
Global account management and program
launch capability
Common platforms with optimised designs
Mega-platforms an opportunity to accelerate global growth
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
The leading component, solutions and systems supplier
2015
Components
2020
Selective growth (BRIC) and disciplined with
market opportunities
Global customer and manufacturing footprint
Solutions
Systems
Greater deployment of advanced
technology products
Fuel-efficient, light-weight,
high performance
Strategic development partner
Next generation AWD systems
and electric drivetrains
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Market leadership in CVJ systems
Global shares 2012
Selective wins, controlled growth
Other
Reducing fixed cost structure
In-house
GKN
41%
Wanxiang/
Neapco
Optimising LCC sourcing strategy
Recovering material costs / inflation
Driving operational excellence
Wia
Favourable capacity / competitor dynamic
Kofco
Strong margin management actions
Nexteer
NTN
GKN positioning in key growth regions
N. America
Brazil
China
GKN Driveline
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
India
Technology leadership in CVJ systems
FWD vehicles
GKN Driveline SX8
RWD vehicles
Progressing with roll-out of new light-weight, fuel-efficient CVJ technology
GKN Driveline VL3
− Lighter and smaller package space
− 1% fuel saving / CO2 reduction
− 50° for premium applications
− Lighter (up to 3.8kg per car set)
− Packaging space reduction (9%)
− Higher power transfer and efficiency
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
3 MILLION/YEAR
GROWING TO 8 MILLION
IN 2018
TARGET TO LAUNCH IN
2015
The making of the global leader in AWD Systems
Major milestones
1985
Commercialisation of the
viscous coupling begins –
becomes a global industry
standard for AWD in 1990s
2011
GKN acquires Getrag Driveline Products
2013
Will launch 1st AWD
disconnect system
2011
Launch of 1st
electric axle
1990 ….
2000
2010
2006
GKN establishes Torque Shanghai
2004
GKN acquires Tochigi Fuji Sangyo
2013
GKN’s SDS JV expanded
to include AWD
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Globally balanced sales and customer profile in AWD
£453m
£423m
Americas
£384m
Europe
Based on 2012 sales
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Asia
Vehicle driveline content increasing
Rear-Wheel-Drive (RWD)
Front-Wheel-Drive (FWD)
with independent suspension
Front sideshafts
Directional
Value Index
100
500
Rear
Propshaft
Rear
sideshafts
Rear Final *
Drive Unit
* Limited slip
differentials
(LSD) sometimes
fitted in Rear
FDU
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Vehicle driveline content increasing
All-Wheel-Drive (AWD)
Four-Wheel-Drive (4WD)
with independent suspension
Front sideshafts
Front Axle*
Power Transfer
Unit
Propshaft
Coupling
Rear Final
Drive Unit
Directional
Value Index
900
1200
Front sideshafts
Front
Propshaft
Transfer Case
(incl. Coupling or TMD)
Rear
Propshaft
Rear sideshafts
Rear Final *
Drive Unit
* Option fitment
Rear sideshafts
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
of Limited Slip
Differential
(LSD) or
Locker
Growing demand for AWD
Consumers like AWD
− Safety, assured driving, performance and image
OEMs like AWD
− Improves vehicle performance and image
− Sellable feature with content and margin
Both want acceptable fuel economy and CO2
Front-wheel
drive
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Traditional
All-wheel
drive
Technology roadmap addresses legislative challenges
The challenge of tougher legislation for emissions and fuel efficiency
EU Legislation
2015
2020
130gCO2/km
95gCO2/km
2025
75gCO2/km
GKN Driveline’s technology response
Today’s AWD
Optimised AWD
Fuel / CO2 Improvement
< 1.5%
Disconnect AWD
4% to 5%
Hybrid/electric AWD
20% - 40%
GKN can influence market technology uptake – systems capability important
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Positioned to continue outperforming the market
Global LV market growth
Mega-platforms
AWD systems content
Mega-platforms and
AWD growth and content
GKN Driveline target growth c.2% ahead of market
Unrivalled global
positioning
− Geographic footprint
− Broad customer base
− Strength in growth markets
Technology leadership /
increasing AWD content
− Response to tighter legislation
− Customer co-developments
− Fuel-efficient products
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Globally competitive
− Increasingly lean and agile cost
structure
GKN Driveline
All-Wheel Drive Systems
Lars Christiansson | MD GKN Driveline Köping & Bruneck
Joining GKN Driveline’s AWD business
Highlights – personal observations
Köping and Newton plants integrated from October 2011
Worked together early to adopt best practices
Cultural fit with focus on safety and excellence
Expanded product and development capability
Well-received by customers – business continuing to grow
High employee satisfaction
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Technology leadership in AWD
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Technology leadership in AWD
Three key technologies for GKN Driveline
AWD Disconnect systems
Electric axle & hybrid AWD
Full AWD systems integration
Link to video
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
AWD Disconnect – The best of both worlds
Traditional AWD is less fuel efficient
than 2WD
− Additional weight
− Drag, friction and churn losses
AWD Disconnect
− Eliminates many of the losses
− Improved fuel efficiency
Seamless connect and disconnect
3 customer launches in 2013/14
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Mainstream AWD disconnect application
Targets broad market for
SUVs and Crossovers
Challenging technology development
with major fuel efficiency benefits
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Premium AWD disconnect application
With a twin-clutch, TWINSTER® rear-drive
module for enhanced vehicle dynamic
Unique GKN capability
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
AWD hybrid with electric axle
Full AWD performance
GKN patented disconnect system
(e-Axle in-use only when needed)
Hybrid functionality
Electric-only driving (short range)
40% fuel efficiency improvement
7 customer programmes launched or
under development
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Source: PSA
New product launch – 2-speed electric axle
Launching 2014
Performance & efficiency
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Unique full AWD systems capability
Design, manufacture and sourcing of
components
Complete development, test
and validation capability
Vehicle dynamics tuning,
software & electronic controls
Customer co-developments
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Summary
Technology leadership is aligned with market trends for fuel efficiency
and low CO2
AWD disconnect systems launching this year
Growing customer interest in hybrid AWD with electric axle
Unique AWD system capability – GKN has the product and the
technology
Important and successful acquisition of Getrag Driveline gives GKN a
market leading AWD footprint
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
GKN Driveline
Conclusion
Andy Reynolds Smith | CEO, GKN Automotive
GKN Driveline summary
Growth c.2%
above market
AWD volumes with higher
content
Excellent position in growth
markets
Global footprint serving megaplatforms
Margin range
8% to 10%
ROIC
>20%
Selective business wins
Disciplined pricing behaviour
Operational excellence
Lean cost structure
Strategic outsourcing policy
Business
performance
Strong cashflow
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Prioritised investment
Disciplined capital allocation