GKN: Leading in our chosen markets JP Morgan Cazenove CEO Conference Nigel Stein | CEO, GKN plc | 13 June 2013 Our strategy Lead in chosen markets Be the best at what we do - focus #1 or 2 in our markets, or plan to get there Leverage global footprint Positioned close to our customers Strong in high growth markets Use established footprint to go faster Technology driving margin Best products to meet customers needs “Something special” to bring to our customers Technology sustains differentiation Operational excellence Safety is our No1 priority Excellence in everything we do Engage with our people Sustain above market growth Achieve profitable growth ahead of our markets Balanced approach: growth, margin and ROIC 2 JP MORGAN CAZENOVE CEO CONFERENCE 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 3 JP MORGAN CAZENOVE CEO CONFERENCE GKN Aerospace Sales $3.5 billion 35 sites, 12,000 people World-class product portfolio % of 2012 Pro-forma sales 53% Aerostructures 42% Engine Systems & Structures 5% GKN Aerospace Wing; Fuselage North America Nacelle &GKN Pylon; Engine systems and services Aerospace Europe Special products Transparencies and Protection Systems Aerospace North America Aerospace Europe & Special Products Group Aerospace Engine Systems (Volvo Aero) 4 JP MORGAN CAZENOVE CEO CONFERENCE Well balanced portfolio Commercial Sales by market 2012 Large commercial aircraft – record order backlog (8,500 aircraft, >$1 trillion) Military Commercial 30,000 aircraft forecast to be delivered 2013 to 2032 30% Military Worldwide defence spending remains subject to budget cutbacks 70% External forecasts Military split US 87% Europe 13% Note: Engine Systems proforma 12 months of 2012 Latest forecast growth rates – 2013 to 2018: − Civil: 3% to 4% CAGR − Military: Flat near term; Future uncertain 5 JP MORGAN CAZENOVE CEO CONFERENCE GKN Aerospace Engine Systems 3rd largest Tier 1 aero-engine partner OEM for the RM12 engine for Gripen aircraft EU centre of excellence - space turbines & nozzles MRO facility for gas turbines and small engines Components for aircraft engines and gas turbines Military aircraft engines Sub-systems for rocket engines Engine services 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 Comme Commercial rcial LTA 24% RRSP 59% MRO 9% Integration progressing well Military/ Space 8% 6 JP MORGAN CAZENOVE CEO CONFERENCE Engine Systems Sales E2013 GKN Aerospace – Well positioned for the future Ship set values $m 7 JP MORGAN CAZENOVE CEO CONFERENCE 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 8 JP MORGAN CAZENOVE CEO CONFERENCE Australia Substantial growth opportunities in global markets Light vehicle production by region 2013 - 2018 (million units) North America Europe 2.2% US & Canada 2.0 West Europe 5.2% -0.4% 2.7 8.3 8.1 2018 2013 2018 2.1 East Europe 4.0 2.9 Japan Russia 4.0% Mexico CAGR 2013 4.5 6.0 4.6 13.1 13.7 13.0 S. Korea 16.0 2007 2013 2018 2007 0.4% 14.1 11.9 2013 2018 China 4.3 4.4 2013 2018 28.8 7.7% South America India 6.4% 10.2% 4.5 6.1 ASEAN 6.7 4.4% 10 19.9 4.1 5 4.5 5.6 2013 2018 0 2013 2018 2013 2018 2013 Source: IHS Automotive LV forecast Feb. 2013, GKN analysis. 9 JP MORGAN CAZENOVE CEO CONFERENCE 2018 Vehicle segment and platform trends Sub-Mini (A) 9% Small (B) 17% Lower Med. (C) 22% Upper med. (D) 7% 2007 (70.6m) Executive (E) 3% 2013 (82.7m) MPV SUV 19% Pickup 4% LCV's 10% 5 10 15 20 Light Vehicle Production (m) 120 100 27% Other 80 60 40 20 28% 32% 21% 29% 39% 15% 25 2007 Large platforms 500k-1m 58% 52% Mega platforms 1m+ 0 9% 2018 (103.6m) 0 The rise of mega-platforms Millions Share of Growth 2013-2018 Million vehicles Global light vehicle production by segment 2013 2018 Small and medium platforms outperform due to Asia influence SUVs drive continuing AWD growth Mega-platforms an important driver Source: IHS Automotive LV Forecast February 2013 10 JP MORGAN CAZENOVE CEO CONFERENCE 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. 11 JP MORGAN CAZENOVE CEO CONFERENCE *Emerging product segment Balanced global footprint with rising AWD contribution Sales by region of origin 2012 Asia 29% Europe 37% All-Wheel Drive CVJ Systems Americas 34% 61% of Sales 39% of Sales 12 JP MORGAN CAZENOVE CEO CONFERENCE 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 13 JP MORGAN CAZENOVE CEO CONFERENCE Globally competitive − Increasingly lean and agile cost structure GKN Powder Metallurgy – the industry leader Hoeganaes Powder production 240,000 tons of powder per year Global # 2 22% global share Sinter Metals Component manufacture 6 billion parts per year many applications Global # 1 18% global share 14 JP MORGAN CAZENOVE CEO CONFERENCE Diverse customer base 75% automotive/ 25% industrial 3,000 customers globally Footprint in high growth markets 70 Million Vehicles 60 Brasil China Russia Mexico India Growing presence and capability in the key emerging markets 50 40 30 20 10 0 2013 2018 India Today # 1 Extending Capacity New Greenfield plant under review Brazil China Today # 7 2018 # 2 Expansion of existing facility New plant opening Q4/2013 Develop powder capability Today # 2 Plan for Expansion in 2014 Mexico and Russia under review 15 JP MORGAN CAZENOVE CEO CONFERENCE Design for PM – Drives margins “…is the design and application of products using the unique characteristics of powder metal to produce parts which cannot be made economically using alternative technologies.” 16 JP MORGAN CAZENOVE CEO CONFERENCE GKN Powder Metallurgy market outperformance LV Market m vehicles Global LV market growth PM Market 2013 104 2018 5.6 £m PM market growth driven by new technology trends 83 GKN Powder Metallurgy outperformance c.3% above LV market 4.3 2013 Unique “Design for PM” capability Global manufacturing and engineering footprint − Innovative design − Technically enhanced powders − Advanced process technology − Product and process engineering capability in all regions − Growing presence in high growth markets 17 JP MORGAN CAZENOVE CEO CONFERENCE 2018 Market Share Gain − Market concentration ongoing − Mega-platforms awarded to global PM players GKN Land Systems: Attractive growth markets Land Systems Market £4bn Agriculture 39% of Sales Macro Drivers Increasing population Changing eating patterns Segment Growth 2013-18 3%-5% (CAGR) Climate changes Land Systems Market £6bn Construction, Mining & Utility 11% of Sales Urbanisation Infrastructure Segment Growth 2013-18 4%-6% (CAGR) Increased mass transit Raw material demand Land Systems Market £8bn Industrial 27% of Sales Globalisation Energy availability/costs * Based on 2012 sales. 23% Other (mainly automotive aftermarket and structures) 18 JP MORGAN CAZENOVE CEO CONFERENCE Segment Growth 2013-18 3%-5% (CAGR) GKN Land Systems offers unique technology coverage From Power Source Segment Presence GKN Position Key Competitors To Power Applied Ind. Ag. & CE. Ind. Ag. & CE. Ag. & CE. #2 #2 or #3 Niche Ag. Altra Renold KTR Centa Rexroth Altra KEB Dana Altra Brevini Bonfiglioli Ag. CE. & Ind. #1 Ag #2 CE Dana Comer Bondioli Weasler Ind. Ind. Ag. & CE. Ag. CE. & Ind. #1 or #2 (Material Handling) Niche (Material Handling) Niche Ag. & CE. #1 or #2 Svenborg Carlisle KEB Altra Mayr Linak Oerlikon Titan Mefro Wheels India Brands 19 JP MORGAN CAZENOVE CEO CONFERENCE GKN Group: Growth of sales above our 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 20 JP MORGAN CAZENOVE CEO CONFERENCE 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 21 JP MORGAN CAZENOVE CEO CONFERENCE A balanced approach to Growth, Margin and ROIC Growth above market Increasing content per platform Strength in high growth markets Target Margin 8% to 10% ROIC >20% Technology underpins Margin Focussed capital allocation Operational excellence Profitability growth Business performance Increasing EPS, cash flow & dividends 22 JP MORGAN CAZENOVE CEO CONFERENCE