GKN: Driving Growth: Delivering Results
Sir Kevin Smith – Chief Executive
ANNUAL GENERAL MEETING – 3 MAY 2007
GKN: leadership in four specialist, global sectors
2
Automotive Driveline
Powder Metallurgy
OffHighway
Aerospace
ANNUAL GENERAL MEETING – 3 MAY 2007
Building the Platform for Growth
Major elements of GKN strategy
Rebalance manufacturing assets to high growth emerging
markets
Secure more value by extending Driveline product offering –
torque technology
Return US Sinter business to profitability and Powder
Metallurgy to growth
Rapid growth and development of Aerospace
Enhance technology base and new product development
across the Group
3
ANNUAL GENERAL MEETING – 3 MAY 2007
Driving Growth: Delivering Results
Improving Performance
US Sinter into profit – Powder Metallurgy profits double
Aerospace sales grow 11% and profits up 30%
Winning Business
Driveshafts wins 75% of sideshafts externally sourced
Record levels of new business in Sinter – up 30%
$850m of programme wins in Aerospace
New products
crosstrack™ and countertrack™ cv joints secure
first orders
Range of torque products successfully launched
Electronic de-icing development on track
4
ANNUAL GENERAL MEETING – 3 MAY 2007
Driving Growth: Delivering Results
Acquisitions
Stellex secures leadership in titanium aircraft structures
Rockford creates No1 in offhighway driveline –
Liuzhou establishes global wheels business
Rockford driveshaft
Emerging market expansion
In China – new plants for Sinter, Torque
and Driveshafts
In India – new plants for Driveline and Sinter
Liuzhou, China
Restructuring
Final stage of strategic restructuring underway
New Sinter plant - Pune, India
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ANNUAL GENERAL MEETING – 3 MAY 2007
2006 results summary
2006
£m
Sales (subsidiaries and JVs)
Increase
%
3,842
3,823
-
Trading profit (subsidiaries and JVs)
263
243
8
Profit before tax
221
204
8
28.8p
22.3p
29
Earnings per share
6
2005
£m
ANNUAL GENERAL MEETING – 3 MAY 2007
Reaction to our 2006 performance
GKN buoyed by impressive results
How to engineer a restructuring
Engineering heirloom made for global market
Flying high: target price increased to 390p
Flying on all 4 engines again
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ANNUAL GENERAL MEETING – 3 MAY 2007
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ANNUAL GENERAL MEETING – 3 MAY 2007
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06
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12
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GKN share price vs FTSE 100 since AGM 2006
140
130
120
GKN
110
FTSE 100
100
90
80
70
60
Our major markets – Automotive trends
(Global light vehicle production ‘000)
90,000
80,000
70,000
Asia/Other
60,000
50,000
Europe
40,000
Americas
30,000
20,000
10,000
0
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
source : Global Insight January 07
Global Compound Annual Growth Rate (CAGR) 1997-2012 – 2.7%
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ANNUAL GENERAL MEETING – 3 MAY 2007
Our major markets - Aerospace trends
Growth in Revenue Passenger Miles
supporting strong aircraft order books
Global increase:
5.9%
Military – US defence budget supports
continued growth
Supplemental
$bn
700
5.8
Base budget
+5.7%
5.7
600
5.6
Deliveries
2005 2006
5.5
378
290
434
398
Orders
2005 2006
500
1055 790
1002 1044
400
5.4
300
5.3
+5.3%
+5.3%
200
5.2
100
5.1
Asia Pacific
Europe
*12 months to December 2006
10
North
America
Source: IATA
ANNUAL GENERAL MEETING – 3 MAY 2007
0
2006
2007
2008
Powder Metallurgy
Sinter Metals’ changing global footprint
2003 sales £539m
A
APS
A
APS
Europe
2006 sales £506m
North
America
APSA – Asia Pacific/South America
Europe
North
America
APSA – Asia Pacific/South America
Record business wins - $235m of annualised sales – swell order
books globally
Powder Metallurgy set for a sustained period of growth
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ANNUAL GENERAL MEETING – 3 MAY 2007
Improving the OffHighway portfolio balance
Other
DLS
Other
Wheels
Improving the
product mix
2003 sales £244m
(continuing businesses)
Wheels
DLS
2006 pro forma sales £405m
(incl acquisitions and transfers)
Inds
Inds
Const
NA Ag
Euro Ag
Improving end
market mix
Euro Ag
Const
& mining
NA Ag
2003 sales £244m
(continuing businesses)
2006 pro forma sales £405m
(incl acquisitions and transfers)
OffHighway to deliver more substantial contribution to 2007 sales and profits
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ANNUAL GENERAL MEETING – 3 MAY 2007
Aerospace – broadening our customer base
Revenue by customer – US$
2006 (inc Stellex pro forma)
2003
Boeing Civil
Boeing Military
Other
Other
Boeing Military
Rolls Royce
UT C (Pratt +
Sikorsky)
Rolls Royce
Bombardier
GE
Bombardier
AgustaWestland
GE
Lockheed Martin
EADS
UTC (Pratt &
Sikorsky)
Honeywell
EADS
Agusta Westland
Lockheed Martin
Armor Holdings
Total $920m
Total $1400m
Aerospace growth and development to continue
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ANNUAL GENERAL MEETING – 3 MAY 2007
Aerospace – continued rapid development and growth
Acquisition of US aero engine component
specialist Teleflex
Hondajet
Extends GKN’s engine component capability
Increases exposure to civil market
Honda selects GKN as composite fuselage
supplier on advanced new business jet
GKN to supply new composite winglets for
Boeing 737 and 767 retro-fit market
Winglet
GKN to supply composite rear fuselage on
new large US military helicopter
CH 53K
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ANNUAL GENERAL MEETING – 3 MAY 2007
Positioning Driveline for Growth – Global Footprint
2006 sales £2,042m
2003 sales £1,926m
O
AP
APO
APO
North
W Europe
America
W Europe
Latin Am
Latin Am
USA
USA
E Europe
E Europe
Products and Market
Driveshafts £5bn market
Driveline £12bn market
17%
34%
Torque Products
Driveline to secure above market growth from 2008 onwards
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ANNUAL GENERAL MEETING – 3 MAY 2007
Driving Growth: Delivering Results
Developing winners
Leader in automotive Driveline power distribution and control
Global technology leader in Powder Metallurgy
Market leader in wheels and driveline products in OffHighway
Leading Tier 1 in lightweight, complex aircraft and engine structures
Sustaining winners
Rigorous application of “lean enterprise” – focus on people
development
Stunning improvements in delivered quality and health and safety
83% of all waste recycled and carbon footprint reduced by 45,000
tonnes since 2004
Driving sustainable growth in all four major businesses
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ANNUAL GENERAL MEETING – 3 MAY 2007
GKN: Driving Growth: Delivering Results
ANNUAL GENERAL MEETING – 3 MAY 2007