Leading in our chosen markets
Summary
Bill Seeger | Finance Director, GKN plc
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
Moving forward with the strategic agenda
Lead in
chosen
markets
Leverage
global
footprint
Technology
driving
margin
Operational
excellence
GKN’s aim of delivering
value to our stakeholders
is driven by:
Growth in sales
Improving margins
Superior return on
invested capital
Strong cash flow
generation
Sustain above
market growth
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Growth of sales in excess of the markets
GKN Land Systems
GKN Aerospace
Innovation insertion in key new programs
Customer demand for global suppliers
New aircraft platforms move into rate production
Demand for efficient, reliable power management
solutions
Application of composite and light weight metallic
technology
Customer partnerships on key, high-growth platforms
GKN Driveline
New market penetration - globalisation
GKN Powder Metallurgy
Growth in all wheel drive increases content
Innovative products for more fuel efficient vehicles
Strong market share in high growth regions
Increasing global/mega platforms
Leverage GKN technology to increase content
New product application of PM technology
Higher performance trends create Design for PM
opportunities
Unique parts and powder capability
Geographic expansion into high growth regions
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Drivers to progress through the margin range
Trading Margin
GKN Driveline
2012 FY
Targets
Technology sustains margin
progression
7.3%
8 - 10 %
− Light weight
− Fuel efficiency
GKN Powder
Metallurgy
GKN Aerospace
10.0%
11.2%
9 - 11 %
− Electrification
11 - 13 %
Operational excellence provides
foundation
− Lean and flexible cost structure
GKN Land Systems
9.4%
8 - 11 %
− Optimising supply chain
− Value driven pricing
Group
8.1%
8 - 10%
= in the range
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
The changing shape of GKN
Rebalancing profit contributions
Top 10 customers – c.50% Group Sales
Boeing
VW
GE
Land
Systems
Driveline
Ford
UTC
Aerospace
EADS
GM
Powder
Metallurgy
JLR/
Tata
Fiat/
Chrysler
Renault /
Nissan
Automotive
Aerospace
Source: 2013 consensus trading profit
Source: Proforma GKN 2012 sales
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Return on invested capital
25%
Aerospace
Land Systems
20%
ROIC
%
Powder Metallurgy
Group Target > 20% (bt)
Driveline
15%
Group WACC - 12% (bt)
Group ROIC
10%
5%
2007
2008
2009
2010
2011*
* ROIC includes proforma adjustment for 2011 acquisitions ** Excludes Volvo Aero
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
2012**
Acquisition
dilution
recovered over
c.2 - 3 years
Framework for cash generation
Operating results
Growth > market
Continued margin progression
Investment
Capex: depreciation ratio 1.2x
Focused capital allocation
Gross engineering spend from
3%
4% of sales
Working Capital
(Average)
c.9% of sales
Pension
£100m cash flow (£60m legacy)
Lean manufacturing - inventory
Strong balance sheet with a good
financing maturity profile
700
Maturity profile
600
500
400
UK Triennial review - 2013
Tax rate
Book rate c.20%
Managing tax rate progression
Debt
Investment grade metrics
Dividends
Progressive policy driven by
EPS growth and cash generation
300
200
100
0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
EIB
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
RCF 2016
RCF 2017
Bond 2019
Bond 2022
A balanced approach to Growth, Margin and ROIC
Growth
above market
Increasing content per
platform
Strength in high growth
markets
Leverage global footprint
ROIC
>20%
Target Margin
8% to 10%
Focussed capital allocation
Technology underpins
sustainability
Process innovation
Operational excellence
Lean manufacturing
Business
performance
Increasing EPS, cash
flow & dividends
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Profitability growth
Leading in our chosen markets
Conclusions
Nigel Stein | CEO, GKN plc
GKN 2013 - 2018
We have grown significantly over the past
two years
2013
Consensus vs
2011 Actual
• Sales
• PBT
And have plans for good organic growth
But we’re not stopping here!
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
∆%
• +25%
• +37%
An exciting future
GKN is a great company
Strong market positions
Leading technology
Excellent people
And an exciting future
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Questions