Exploiting Our Capabilities
GKN Strategy
A portfolio of global market-leading engineering businesses
Securing leadership through:
Superior technology and world-class manufacturing
Global presence and strategic customer relationships
A culture of continuous improvement
Targeted acquisitions to accelerate growth
1
EXPLOITING OUR CAPABILITIES
Building Capability – GKN Driveline
Leading Driveline
Systems & Solutions
Base Business
Development Centres
Lohmar
Toshigi
CVJ Systems
All Wheel Drive Systems
Transaxle Solutions
e Drive Systems
Proving Ground, Japan
Revenue by Region of Origin*
Key acquisitions
Toshigi Fuji Sangyo
Velcon
70% of assets Western
Europe and North
America
Strategic Restructuring
Asia
36%
25%
Americas
39%
Europe
*Q1 2010
2
EXPLOITING OUR CAPABILITIES
Building Capability - Driveline
Unrivalled Capability in Automotive Driveline
3
EXPLOITING OUR CAPABILITIES
Building Capability – Powder Metallurgy
Base Business
Development Centres
Riverton
Radevormwald
Global No 1 –
Design for PM
Accelerating Growth
Key acquisitions
Buzau
Strategic Restructuring and
Best in Class PM Process
25% of revenue on
new applications in
5 years’ time
4
EXPLOITING OUR CAPABILITIES
Building Capability - Aerospace
Development Centres
Composite Research Centre,
Cowes
Engine Composites, Cromwell
£250m UK Based
£1.5bn Global First Tier
JSF Fan Inlet Case
Key Acquisitions
Civil Focus
Build To Print
Aerostructures
5
Boeing, St Louis
Teleflex
Stellex
Airbus, Filton
Civil Military Balance
Risk Sharing Design Partner
Aerostructure, Engines and Canopies
EXPLOITING OUR CAPABILITIES
Building Capability - Aerospace
GKN position on new programmes with shipset values over $½m
A350
A380 /GP7000
F-35/F-135*
CH53-K
A400M
B747-8
B787/GENX
0
1
2
3
4
5
6
7
8
9
UCAS – Strategic Partnership with Northrop Grumman
*includes $500K for customer furnished
material in LRIP planned to be
contractor supplied in rate production
6
EXPLOITING OUR CAPABILITIES
Building Capability – Land Systems
Global market trends accelerating demand for new
technology and greater supply chain capability in industrial
sectors
GKN competencies developed in automotive and
aerospace becoming increasingly relevant in other existing
and new industries
Land Systems created to exploit those opportunities
Goal to create a fourth GKN global leader in industrial
power management and high technology structures
7
EXPLOITING OUR CAPABILITIES
GKN Land Systems
Building a new world leader for GKN
Exploiting GKN capabilities to drive growth in existing and
new attractive markets
Leveraging GKN group-wide technology to drive growth
across markets
Delivering through a world class global operational capability
8
EXPLOITING OUR CAPABILITIES
Land Systems – exploiting GKN capabilities
Power
Management
High Performance
Structures
Aftermarket
and Service
Building a new world leader for GKN
9
EXPLOITING OUR CAPABILITIES
Clear long term market trends and drivers….
Growing population,
urbanization, diet
change, global warming,
changing global threats
10
Changing
military
environment
Scarcity of
resources, land,
water, oil
Increased mass
transport
Renewable
energy
EXPLOITING OUR CAPABILITIES
Market drivers aligned to GKN capabilities
High performance lightweight structures
High efficiency and durable driveline power management
Electrical power for primary and secondary drive
A focus on lifetime costs and the aftermarket
Demand for operationally excellent global manufacturing
in markets
11
A focus
on low carbon
technology
capability
A focus
on value and
reliability
EXPLOITING OUR CAPABILITIES
Markets
GKN capabilities – applicable to existing and new markets
GKN Capabilities
Power
Management
High
Performance
Structures
Aftermarket
and Service
12
EXPLOITING OUR CAPABILITIES
Establishing a platform for the future
2009
OffHighway
2010 Onwards
Driveline Systems
Land Systems
Wheels
Power Management
Service and
Distribution
Automotive
Structures
High Performance
Structures
Driveline
Industrial
Distribution
Services
13
Aftermarket and Service
EXPLOITING OUR CAPABILITIES
Existing market leadership positions
Power Management
Number No1 in agricultural power take off shafts
North American No1 in high speed shafts for
construction applications
Market leading position for complex transmissions in
European agriculture markets
High Performance Structures
Global leadership in wheels for agricultural,
construction and mining wheels
Technology leadership in high performance structures
Aftermarket and Service
Leading position for service and distribution to
agriculture, industrial and truck customers
14
EXPLOITING OUR CAPABILITIES
Strong global brands
Power Management and Structures
15
Aftermarket and Service
EXPLOITING OUR CAPABILITIES
Global customer base
Agriculture
16
Construction
Mining
Military
Specialty
EXPLOITING OUR CAPABILITIES
Market and geographic expansion potential
Current Markets
Current Geographies
Other
11%
Aftermarket
42% Agriculture
23%
14%
Military /
Industrial / Rail
17
10%
Construction
& Mining
EXPLOITING OUR CAPABILITIES
Market drivers aligned to GKN capabilities
High performance lightweight structures
High efficiency and durable driveline power management
Electrical power for primary and secondary drive
A focus on lifetime costs and the aftermarket
Demand for operationally excellent global manufacturing
in markets
18
A focus
on low carbon
technology
capability
A focus
on value and
reliability
EXPLOITING OUR CAPABILITIES
Trends and drivers align to GKN capabilities
High performance structures
Today
Tomorrow
Astrium composite solar
panel structure
A350 - composite wing trailing edge advanced
process technology
Bentley sub frame
Boeing 787
electronic
de-icing –
smart
structures
Composite
aerospace
winglet
Lightweight aluminium
structures
19
EXPLOITING OUR CAPABILITIES
Trends and drivers align to GKN capabilities
High efficiency and durable driveline power management
Today
Tomorrow
Complete driveline system
20
Continuously variable drive
EXPLOITING OUR CAPABILITIES
Trends and drivers align to GKN capabilities
Electrical power for primary and secondary drive
Today
Tomorrow
Electrical implement drive
PSA hybrid AWD axle
21
Electric tractor of the future
EXPLOITING OUR CAPABILITIES
Trends and drivers align to GKN capabilities
A focus on lifetime costs and the aftermarket
>40 service
centre locations
Industrial mill driveline management
service
22
EXPLOITING OUR CAPABILITIES
Trends and drivers align to GKN capabilities
Demand for operationally excellent global manufacturing in markets
GKN components supplied locally
to CAT
Wheels
Rockford driveshaft
Fan clutch
The preferred supplier globally
with “partner” status
North America
South America
Europe
Australia
China
23
EXPLOITING OUR CAPABILITIES
Taking GKN capabilities to new markets
Three attractive new markets to GKN have been targeted
Military vehicles
High speed rail
Alternative energy – wind power
24
EXPLOITING OUR CAPABILITIES
Military vehicle trends and drivers
Changing in-theatre requirements
Challenging terrain demand significant increase in independent suspension and
advanced driveline solutions
Increased focus on light weight solutions without sacrificing function or
troop safety
“weighing out” before “cubing out”
Long term shift to more fuel efficient powertrain
Budgetary considerations having a major impact
Increased upgrade and re-fit of existing assets
25
EXPLOITING OUR CAPABILITIES
Military vehicle driveline and suspension
is becoming more sophisticated
Driveline, Suspension
Structure, Armour,
Passenger Protection
Other
11%
33%
13%
% value of
total vehicle
cost
54%
11% to 33% of total vehicle cost
% value of
total vehicle
cost
76%
13%
HMMWV
26
JLTV
EXPLOITING OUR CAPABILITIES
Bringing GKN global technology and
automotive capability to new market sectors
Additional GKN components
supplied to Oshkosh
Fan clutch
Oshkosh
TAK4
Rockford driveshaft
6,600+ vehicles and lifetime
supply requirements with rapid
industrialisation
Crucial product for Joint Light Tactical Vehicle (“JLTV”)
driveline suspension system
27
EXPLOITING OUR CAPABILITIES
Rail trends and drivers
Environmental legislation in
Europe and America
Significant high-speed rail plans in place
Increasing urbanisation in high growth
economies
Infrastructure is obsolete and poorly maintained
and used mainly for freight
Aggressive programme in China
40,000km of additional network
28
EXPLOITING OUR CAPABILITIES
Rail product opportunities
Driveline: GKN driveshaft provides critical fail safe components on high
speed trains supported by through life service programme
Transparencies:
high strength glass
29
EXPLOITING OUR CAPABILITIES
UK offshore wind power
Increasing wind turbine size 50kW -100kW in the 80’s
to 5MW – 10MW under development
The UK has the world’s largest offshore wind program
Transmission technology and supply chain capability
to be rapidly developed to meet demand
Increasing power
Far higher reliability required
Complex blade designs
Individual blades up to 74m in length
30
EXPLOITING OUR CAPABILITIES
Typical wind turbine cost breakdown
% of a 3.5MW
turbine with cost
of £3.0m
15%
11%
5%
5%
14%
16%
16%
18%
Blades
31
Tower
Transmission
Top
Control
Generator Foundry
Others
Transport
Assembly
Project Nova
EXPLOITING OUR CAPABILITIES
GKN Land Systems
Exploiting GKN capabilities in existing and new,
attractive markets
Leveraging GKN Group-wide technology to drive growth
across markets
Delivering through a world class global operational capability
Build sales to £1.5bn over 5 years
Building a new world leader for GKN
32
EXPLOITING OUR CAPABILITIES
Appendices
The purpose of the following slides is to highlight the changes to the Group’s
reportable segments as a result of the creation of GKN Land Systems. They also
reflect the impact of separately reporting the Group’s axles business, which is in
the process of being exited.
Financial information, Group and Divisional, unless otherwise stated, is presented
on a management basis which aggregates the sales and trading profit, as
applicable, of subsidiaries and the Group’s proportionate share of joint
ventures. Management trading profit or loss excludes restructuring and
impairment charges, profits and losses on sale or closures of businesses,
amortisation of non-operating intangible assets arising on business combinations,
change in value of derivative and other financial instruments and other net
financing charges.
34
EXPLOITING OUR CAPABILITIES
Appendix 1
IMPACT OF LAND SYSTEMS ON SEGMENTAL REPORTING
2009 FULL YEAR - SALES
OLD FORMAT
Driveline
Powder Met
2009
£'m
1,992
512
Aerospace
1,486
-
OffHighway
361
117
4,468
(361)
593
(57)
14
-
Other Auto
MANAGEMENT SALES
Change
£'m
(189)
-
NEW FORMAT
2009
£'m
1,803 Driveline
512 Powder Met
1,486 Aerospace
593
60
14
4,468
Land Systems
Emitec / Cylinders
Axles (Business Closed)
MANAGEMENT SALES
2009 FULL YEAR - TRADING PROFIT
OLD FORMAT
35
NEW FORMAT
2009
£'m
10 Driveline
(7) Powder Met
Driveline
Powder Met
2009
£'m
16
(7)
Change
£'m
(6)
-
Aerospace
169
-
OffHighway
(12)
12
-
Other Auto
Corporate
MANAGEMENT TRADING PROFIT
(2)
(12)
152
(3)
1
4
(3)
(1)
(12)
156
MANAGEMENT TRADING PROFIT
152
(4)
-
169 Aerospace
Land Systems
Emitec / Cylinders
Corporate
MANAGEMENT TRADING PROFIT
(4) Axles (Business Closed)
Reportable Segments
EXPLOITING OUR CAPABILITIES
Appendix 2
RE-STATED GROUP SEGMENTAL ANALYSIS
SALES
Full Year
£'m
2010
Q1
£'m
Driveline
Powder Metallurgy
Aerospace
Land Systems
Other Businesses
Axles (Business Closed)
811
229
770
329
26
9
992
283
716
264
34
5
1,803
512
1,486
593
60
14
580
180
353
173
20
4
MANAGEMENT SALES
2,174
2,294
4,468
1,310
TRADING PROFIT
Driveline
Powder Metallurgy
Aerospace
Land Systems
Other Businesses
Corporate
36
2009
H2
£'m
H1
£'m
2009
H2
£'m
H1
£'m
Full Year
£'m
2010
Q1
£'m
(36)
(14)
79
1
(2)
(3)
46
7
90
(4)
1
(9)
10
(7)
169
(3)
(1)
(12)
37
11
32
6
1
(3)
MANAGEMENT TRADING PROFIT
25
131
156
84
Axles (Business Closed)
(2)
(2)
(4)
Reportable Segments
EXPLOITING OUR CAPABILITIES