Sir Kevin Smith – Chief Executive
AGM – Year ended 31 December 2008
The Times, December 2008
BusinessWeek, November 2008
Four-month shutdown for Honda UK
BBC, January 2009
Gulfstream, Cessna in 2-Year Slide as CEOs Shun Jets
Bloomberg, April 2009
China urges airlines
to delay or cancel plane orders
Financial Times, May 2009
International Herald Tribune, December 2008
Caterpillar Has First Loss in 16 Years, Cuts Forecast
Bloomberg, April 2009
2
AGM – Year ended 31 December 2008
2008/09 Light Vehicle Production
Rapid global 4th quarter decline
September
YTD
%
December
Month
%
Q4 2008
%
(3)
(40)
(30)
(13)
(17)
(24)
Japan
7
(37)
(21)
China
13
(22)
(11)
Brazil
21
(56)
(27)
Year on year
Western Europe
North America
Moved swiftly to minimise impact on operations
3
AGM – Year ended 31 December 2008
Results summary 2008
2008
Sales (subsidiaries and JVs)*
Profit before tax**
Net debt
Dividend per share (p)
1st Half
£m
2nd Half
£m
Total
£m
2007
£m
Change
£m
2,402
2,215
4,617
4,100
517
131
36
167
255
(88)
(529)
(708)
(708)
(506)
(202)
4.5
-
4.5
13.5
* Excludes Sheepbridge Stokes
** Before restructuring and impairment charges, amortisation of non-operating intangible assets arising on business combinations, profits and
losses on sale or closure of businesses and currency impact of changes in fair value of derivative and other financial instruments
4
AGM – Year ended 31 December 2008
(9.0)
2008 – Highlights
Winning New Business
Driveline secures 77% of available driveshafts business
New driveline products winning substantial new orders
Over $3 billion of new business secured by Aerospace
Building the Future
Filton acquisition major step in development of Aerospace
New plants open in China, India, Argentina and Turkey
Technology JV with Rolls Royce on Engine composites
Resilience from end market diversity
OffHighway delivers record results
Sales up 32% Profits up £11m
Aerospace growth story continues
Sales up 22% Profits up £22m
5
AGM – Year ended 31 December 2008
2009 extremely uncertain – expected declines in most
GKN markets
2009 planning baseline
Automotive
Global light vehicle production decline around 16% to 56 million
vehicles
Aerospace
Defence markets robust
Civil softening – Business Jets 40% down
Large civil aircraft 20% lower by year end
OffHighway
End markets, particularly agriculture, soften through 1st half
25% down through second half
6
AGM – Year ended 31 December 2008
Major restructuring and extensive cash conservation
actions
Around 6,000 people to leave the Group
Temps, agency and employees
5,300 left by end March
7 plant closures underway across divisions
Extensive short time working implemented
2,400 equivalent full time employees
Cash management
Capital investment (excluding A350) below 0.7 times depreciation
Strong focus on working capital reduction
7
AGM – Year ended 31 December 2008
2009 1st Quarter Performance
Global light vehicle production down 35% - OffHighway softens sharply –
Aerospace robust
Sales (subsidaries & JVs) of £1,085 million, down 8%
Underlying down 33% - Automotive (45%),OffHighway (20%)
Aerospace underlying up 4%, headline sales increased 70%
Group trading loss of £13m
Automotive (£47m) of which (£42m) Jan/Feb
Offhighway slightly positive
Aerospace delivers £34m – up over 60%
Group returns to profitability in March
Net debt £889m – facilities available £1.3bn – headroom £348m
Filton acquisition January
Benefits working capital/capex reductions constrain seasonal outflow
8
AGM – Year ended 31 December 2008
Building capability - Aerospace
“Sea Change in Stealth” – Northrop Grumman
UCAS-D
Aviation Week December 2008
GKN Aerospace produce around 80%
of total aircraft structure
Building Capability – Driveline
GKN Driveline Supply to BMW Group
Super LSD for Mini Cooper S
ETM2 for all BMW M cars
Front Sideshafts for all AWD BMW cars
EMCD for Mini AWD
VLi sideshaft for all RWD / AWD cars
ST53 Joint & Face Spline for all AWD cars
In production
10 AGM – Year ended 31 December 2008
Under Launch
ViscoLok for all BMW M cars
ETV Units for X6
Committed to Growth
Filton Acquisition a Step Change for Aerospace
Airbus preferred partner for Filton and wing technology
development
Long term relationship in large commercial aircraft
Lifts civil sales to over 55% total
Life of programme across all current Airbus platforms
Significant position on A350 and a global leader in aircraft wing
structures
Meeting expectations - £90m sales, 5-7% year 1 margin,
generating cash
11 AGM – Year ended 31 December 2008
A350 FTE & Assembly
Outer Spar
Mid Spar
3 Spars total over 27m in
length with an accuracy of
+/- 0.3mm
Inner Spar
FTE assembly weighs
1800kg
The FTE is 7% of total wing
weight and supports 10x its
own weight
Spar Auto Fibre Placement
12 AGM – Year ended 31 December 2008
New GKN products entering the market in 2009
Driveshafts
Tata Nano
Torque
Aerospace
Electric Drive Axle for new
PSA Peugeot Citroën
HYbrid4 Technology
Ice protection system for
Boeing 787
Powder Metallurgy
OffHighway
Timing gears VW
High efficiency gearboxes
and axles for combines
13 AGM – Year ended 31 December 2008
Striving for Excellence – GKN Excellence Awards 2009
Customer Service
GKN Torque Technology
Performance Improvement
Through Production And
Business Process
Excellence
GKN Driveline Nagoya
Technology
GKN Aerospace - ASTECH
Product Quality
GKN Driveline Cheonan
Performance Improvement
Through People Excellence
And Best Practice
GKN Global Human Resources
Environment
GKN Rockford &
GKN Driveline Brazil
Safety
GKN Sinter Metals Dubois
14 AGM – Year ended 31 December 2008
Continuing to Care – Hearts of Gold Award
Mr Gangaram Mane – Established a school for needy children
Richard Green
GKN Aerospace IoW
Kerry Green Trust
15 AGM – Year ended 31 December 2008
GKN Driveline India
Centre for Underprivileged
Girls and Women
GKN OffHighway Liuzhou
Liubei Special Needs School
Summary of Key Messages
2009 a very challenging year – outlook uncertain
Solid operating plan focused on liquidity and cost
reduction
High quality businesses crucial to industrial structure
Aerospace supplies high tech products to 45 aircraft
programmes – positioned on all major new platforms
Driveline supplies to almost half all light vehicles produced
globally
Quality of businesses and determined management
See through recession and position for strong recovery
16 AGM – Year ended 31 December 2008
AGM – Year ended 31 December 2008