AGM – Year ended 31 December 2010
Sir Kevin Smith, Chief Executive
AGM – Year ended 31 December 2010
AGM – Year ended 31 December 2010
2010 – Delivering Sustainable Growth
A year of really excellent progress for GKN
Group 2010 sales increase 22% - trading profit up 163%
All divisions make solid contributions
Driveline and Powder Metallurgy sales increase 38% vs 24% increase
in global light vehicle production
Strong free cash flow generation – net debt halved from £300m
to £151m
Final dividend of 3.5p brings total to 5.0p per share
GKN
AGM – Year ended 31 December 2010
AGM – Year ended 31 December 2010
Delivering Sustainable Growth
2
2010 Results Summary
2010
£m
Sales
2009
Increase/
Change
£m Decrease
%
5,429
4,454
975
411
156
255
Trading margin
7.6%
3.5%
4.1%
Profit before tax
363
87
276
Trading profit
AGM – Year ended 31 December 2010
AGM – Year ended 31 December 2010
22
3
2010 – Delivering Sustainable Growth
Conclusion of restructuring programme – growth the priority
Driveline - new plants in India and China plus major expansion
in Mexico
Emerging industry trends accelerate demand for Powder Metallurgy
applications
$1.5bn of new wins in Aerospace – across range of airframe and
engine programmes
Land Systems strategy delivering results
GKN
AGM – Year ended 31 December 2010
AGM – Year ended 31 December 2010
Delivering Sustainable Growth
4
Share price performance
+62.8%
+31.9%
+9.3%
+4.2%
Notes
1. Automotive index includes the following companies: American Axle, Autoliv, Borg Warner, Johnson Controls, Magna, TRW and Valeo
2. Aerospace index includes the following companies: BAE Systems, Cobham, Goodrich, Meggitt and Rolls Royce
Source: Datastream
AGM – Year ended 31 December 2010
AGM – Year ended 31 December 2010
5
GKN Performance in the FTSE 100
£3,463m
£1,806m
£875m
AGM – Year ended 31 December 2010
AGM – Year ended 31 December 2010
6
2010 - Delivering Sustainable Growth
Driveline
Revenues up 35% to £2.4bn with outperformance in all global regions
– trading profit £169m (£10m)
Americas
Europe
Japan
China
Driveline sales
Market (units production)
Asia
35%
Americas
27%
2010 Sales by Region
Europe
38%
AGM – Year ended 31 December 2010
AGM – Year ended 31 December 2010
7
2010 - Delivering Sustainable Growth
Driveline
Excellent performance in winning new business
Driveshaft products
80% win rate on new driveshaft business
All Wheel Drive and Transaxle products
High speed propshafts: Volvo, VW, Mercedes and Audi
Electronic differential locker - two new programmes with Ford
e-Drive systems
2010
£2.4bn
Transmissions for electric vehicles and plug-in hybrid
Electric drive axle evaluations with five customers
E-Transmission
AGM – Year ended 31 December 2010
AGM – Year ended 31 December 2010
Electric Drive Axle
8
2010 - Delivering Sustainable Growth
Powder Metallurgy
Powder Metallurgy sales up 48% to £759m - trading profit £54m (£(7m))
Sinter Metals market outperformance and strong revenue growth in
major markets
North America
Market (units production)
Western Europe
Sinter Metal sales
Sales in India, China and Brazil increase by 55%
Powder Metallurgy sales by
region of origin
AGM – Year ended 31 December 2010
9
Accelerated Trend Towards Design for PM
Efficient Transmission
Reduced Emissions
Energy Efficiency
Driving Dynamics
Industrial
Electrification
New products and
design for PM
increase to c.40%
of sales in 2015
AGM – Year ended 31 December 2010
10
2010 Delivering Sustainable Growth
Land Systems
Recovery in mining, construction and agricultural equipment markets
underway
Land Systems revenues up 18% to £699m - trading profit £37m (£(3m))
Sales by Market
20%
Sales by Business
37%
£256m
£190m
Industrial
Agriculture
11%
Construction
& Mining
Commercial
Vehicle /
Passenger Car
32%
AGM – Year ended 31 December 2010
Aftermarket
& Services
Power
Management
Wheels & High
Performance
Structures
£253m
11
Land Systems – New market penetration
Defence
Driveline systems
for better mobility and
protection
Industrial
Industrial
Driveshafts for
bottling machines
Power
management
monitoring system
AGM – Year ended 31 December 2010
AGM – Year ended 31 December 2010
12
Land Systems – Utilising GKN Group Technology
Integrated Drive Line System
Complete drive train
650 - 1000hp
High reliability
Increased fuel economy
Much more to come from Land Systems
AGM – Year ended 31 December 2010
AGM – Year ended 31 December 2010
13
2010 - Delivering Sustainable Growth
Aerospace
2010 exciting achievements for GKN Aerospace
Boeing 787
GKN Ice Protection
systems operates on
First Flight
Northrop N-UCAS
First Flight with GKN
composite
structures
Sikorsky CH53K
Delivery of first
composite primary
structure rear
fuselage
HondaJet
Flies with GKN
composite fuselage
Airbus A400M Flies
with GKN
composite wing
spars
A350
First composite
auto fibre placed
wing spar produced
in new GKN facility
2010 development milestones become production programmes
for 2012 and beyond
AGM – Year ended 31 December 2010
14
2010 - Delivering Sustainable Growth
Aerospace
Civil Aircraft market into recovery
Airbus and Boeing Commercial backlog further extended to around 7,000 aircraft
Production rate increases in all large commercial segments
US defence spending remains relatively stable
F18, C130J, Blackhawk, CH53K, JSF – solid production platform
2010 Revenues down 2% to £1.45bn - trading profit £162m (£169m)
Military revenues down – Civil broadly flat
Return to strong organic growth and further margin expansion in 2012
AGM – Year ended 31 December 2010
AGM – Year ended 31 December 2010
15
GKN Aerospace - Well Positioned for the Future
Blackhawk
*
A400M
B747-8
*
F18
F-35
V22
*
C130J
C17
HTF7000
A380
*
*
*
A350
B787
*
A330
A320
*
*
CH53-K
*
1
* Life of programme
AGM – Year ended 31 December 2010
AGM – Year ended 31 December 2010
2
3
4
5
6
7
8
Significant proportion of life of programme
(Ship set values $m)
16
2011 – First Quarter Results
Market conditions in Q1 encouraging although tragic events in
Japan had some impact on Automotive
Good growth in Automotive and Land Systems divisions
Aerospace in line
All four divisions making good progress
Sales increase 14% to £1,487m
Trading profit up 42% to £119m
Trading margin of 8.0%, up from 6.4%
“GKN has made strong progress in Q1 with double-digit sales growth and
a further 160bp improvement in the operating margin.” - Investec
“Q1 profit about 5-10% ahead of
expectations.” – UBS
AGM – Year ended 31 December 2010
“Better than expected IMS.”
– Jefferies
17
AGM 2011 - Summary
2010 performance solidifies a strong recovery from global recession
2011 expected to be a year of further good progress for the Group
Industry trends and market positioning supports sustainable above
market growth in all four divisions
Driveline global positioning and new product penetration
Powder Metallurgy new applications and success of “Design for PM”
Land Systems market recovery and increasing industrial demand for efficient
power management
Aerospace growth in civil aviation and positions on all major new aircraft and
engine programmes
Strong balance sheet provides capacity to support that growth
GKN
AGM – Year ended 31 December 2010
Delivering Sustainable Growth
18