GKN Aerospace
Making things fly
Charles Paterson | SVP Business Development and Strategy
Nick Waters | CFO
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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INVESTOR AND ANALYST VISIT TO GKN AEROSPACE SITES JULY 2 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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INVESTOR AND ANALYST VISIT TO GKN AEROSPACE SITES JULY 2 2013
17% CAGR
achieved
2005-2013
GKN Aerospace – Markets and customers
Market
Business
Mix
Sector
Customer Base
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INVESTOR AND ANALYST VISIT TO GKN AEROSPACE SITES JULY 2 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
B787 Floor Grid
B767 Winglet
HondaJet Fuselage
B787 Cabin Windows
B787 Inner Core Cowl
Full Engine MRO and support
Ariane 5 Exhaust nozzle
Note: * Engine Systems proforma 12 months of 2012
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INVESTOR AND ANALYST VISIT TO GKN AEROSPACE SITES JULY 2 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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INVESTOR AND ANALYST VISIT TO GKN AEROSPACE SITES JULY 2 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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INVESTOR AND ANALYST VISIT TO GKN AEROSPACE SITES JULY 2 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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INVESTOR AND ANALYST VISIT TO GKN AEROSPACE SITES JULY 2 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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INVESTOR AND ANALYST VISIT TO GKN AEROSPACE SITES JULY 2 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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INVESTOR AND ANALYST VISIT TO GKN AEROSPACE SITES JULY 2 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
NewGen Trainer
(T-X)
Long Range Strike Mission
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INVESTOR AND ANALYST VISIT TO GKN AEROSPACE SITES JULY 2 2013
GKN Aerospace – well positioned for the future
Ship set values $m
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INVESTOR AND ANALYST VISIT TO GKN AEROSPACE SITES JULY 2 2013
Technology – Targeted innovation
Future product differentiation
Future wing
technologies
Advanced
fuselage
Nacelle, pylon
and exhaust
Engine
structures
Engine
rotatives
Transparencies
and coatings
Next generation
composite processes
Advanced
metallic processes
Advanced process development
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INVESTOR AND ANALYST VISIT TO GKN AEROSPACE SITES JULY 2 2013
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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INVESTOR AND ANALYST VISIT TO GKN AEROSPACE SITES JULY 2 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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INVESTOR AND ANALYST VISIT TO GKN AEROSPACE SITES JULY 2 2013
GKN Aerospace summary
Growth c.2%
above market
Good position on existing
and new commercial
programmes
On the right military
platforms
Margin range
11% to 13%
GKN technologies bringing
customer value
ROIC
>20%
Capital allocation
Effective make or buy
Balance between partnerships
and long-term agreements
Lean deployment throughout
value chain
Business
performance
Requires time to recover
Volvo Aero and new
programme investments
Strong cashflow
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INVESTOR AND ANALYST VISIT TO GKN AEROSPACE SITES JULY 2 2013
Welcome to
GKN Aerospace Filton
June 2013
GKN Aerospace Filton – Overview
Major Assembly
& Integration
Sales: £350m
Workforce >1,750
including >100 Design
Centre Engineers
Wing Box
Leading Edge
Trailing Edge
Structural SubAssembly
Flight Control Surfaces
Shroud Box
Fixed Shroud
Facilities: 105,000sqm
Programmes:
Large Civil
Military Transport
Biz Jet
Military Fast Jet
Machined Primary Structural
Components
Gear Ribs
Pintle Fitting
Rib Centre of Excellence
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INVESTOR AND ANALYST VISIT TO GKN AEROSPACE SITES JULY 2 2013
Wing
Systems
Fuel
Anti-Ice
Bleed Air
Pneumatics
Hydraulics
Recent Growth and Investment
Technology Investment
£23M capital investment since 2009
£30M projected over next 3 yrs (~70% on increasing capacity)
Increased capacity and New Programme investment
Filton Engineering Centre established
Extended Customer Base
Increased to 8 customers
Design & Build work packages
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INVESTOR AND ANALYST VISIT TO GKN AEROSPACE SITES JULY 2 2013
GKN AEROSPACE EUROPE – Metallics Centre of Excellence
Assembly
GKN specialises in the design and manufacture of large complex Aircraft
structures. We apply the latest generation of automation to new customer
programmes and seek to continuously improve our current product range.
We support a wide range of fixed & rotary wing programmes across civil,
business jet, military fast jet and transporter platforms.
Product Expertise
Integrated Aerostructures:
Key Processes
Automated Spar Drilling & Fettling
incl Leading & Trailing Edge, Wing
Box, Flight Control Surfaces &
Airframe Assemblies
Automated Riveting & Fastening
Structural sub-assemblies:
Interchangeablility (ICY)
incl D-Nose, Shroud Box, Fixed
Shroud, Aft Pylon Fairings, Door
Frames & Nacelle structures
Determinate Assembly
Laser Tracking
Robotic Assembly
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INVESTOR AND ANALYST VISIT TO GKN AEROSPACE SITES JULY 2 2013
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GKN AEROSPACE EUROPE – Metallics Centre of Excellence
Complex machined components
GKN capabilities are recognized for its expertise in design and
manufacture of high speed aluminium and hard metals machining.
Our products support a wide range of fixed & rotary wing programmes
across civil, business jet, military fast jet and transport platforms.
Product Expertise
Hard Metal incl Landing gear
Key Processes
5 Axis machining
ribs, Pintle fittings, Catcher
brackets, Flap tracks, Pylon
fittings
Automated NDT
Soft Metal incl wing tank ribs,
Co-ordinate measurement
Wing tank ribs, Leading and
Trailing edge brackets, Track ribs,
A-frames, Rib posts, access
panels
000
Robotic finishing
In house programming in NCL,
CATIA & CADDS 5
Automated treatments
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INVESTOR AND ANALYST VISIT TO GKN AEROSPACE SITES JULY 2 2013
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GKN AEROSPACE EUROPE – Metallics Centre of Excellence
Complex fabricated components
GKN Aerospace is a world-class supplier to the aerospace industry,
manufacturing a wide range of precision pipes, ducts and complex
fabricated components.
Our products support a wide range of fixed & rotary wing programmes
across civil, business jet, military fast jet and transport platforms.
Product Expertise
Aircraft systems:
Key Processes
2D & 3D laser profiling
Slat track cans, Ducting incl
NACA, Bleed air, Anti-ice, fuel and
Hydraulic pipes
Heat Treatment
Metal forming: incl Door
Electron Beam Welding
beams, Wing brackets, Sub spars
Resistance welding
Fluid cell & Draw forming
Reverse engineering
Surface treatments
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INVESTOR AND ANALYST VISIT TO GKN AEROSPACE SITES JULY 2 2013
2
Tour of Filton
Visits to:
Integrated Machining Facility (IMF)
A380 Trailing Edge Assembly
A330, A400M Leading and Trailing Edge Assembly
Thank you for your visit
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INVESTOR AND ANALYST VISIT TO GKN AEROSPACE SITES JULY 2 2013