GKN
Overview and introduction
26 February 2013
Updated 5 July 2013
Strategy
Creating long-term
shareholder value
Four strong divisions
Lead in chosen
markets
Growth target:
Above market
Leverage global
footprint
Technology driving
margin
Operational
excellence
Margin
Group target:
8-10%
Sustain above
market growth
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GKN OVERVIEW PRESENTATION 2013
BUSINESS
PERFORMANCE
Increasing cashflow,
EPS and dividends
ROIC
Target: 20%
Financial overview 2012*
Sales
Profit before tax
ROIC
£6,904m
£497m
18.1%
2011: £6,112m
2011: £417m
2011: 18.3%
Earnings per share
Total dividend
Net debt
26.5p
7.2p
£871m
2011: 22.6p
2011: 6.0p
2011: £538m
*Numbers presented on a management basis
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GKN OVERVIEW PRESENTATION 2013
Delivering to our markets
We have four operating divisions: GKN Driveline and
GKN Powder Metallurgy that focus on the automotive market;
GKN Aerospace; and GKN Land Systems. Every division is a
market leader, each outperforming its markets, giving unrivalled
expertise and experience in delivering cutting-edge technology
and engineering to our global customers:
GKN Powder Metallurgy
The world’s largest manufacturer of
sintered components,
predominantly to the automotive
sector.
2012 - Sales by division
Other
1%
£933m
Land
Systems
13%
£3,236m
£1,775m
(Volvo Aero
£191m)
Aerospace
26%
GKN Driveline
A world leading supplier of
automotive driveline systems
and solutions, including
all-wheel drive.
Driveline
47%
GKN Aerospace
A leading first tier supplier to the
global aviation industry focussing on
aerostructures, engine systems and
products and specialty products.
GKN Land Systems
A leading supplier of technologydifferentiated power management
solutions and services to the
agricultural, construction, industrial
and mining sectors.
Powder
Metallurgy
13%
£874m
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GKN OVERVIEW PRESENTATION 2013
Global engineering
Strong global presence, operating in over 30 countries across five continents
Build and maintain strong relationships with key global equipment manufacturers and OEMs
Diversity in end markets
Construction
Agriculture and Mining
2%
5%
Industrial
6%
Aerospace
26%
Automotive
61%
Sales by customer*
Sales by region
Approx 1%:
John Deere
Suzuki
GE
PSA
Caterpillar
Rolls-Royce
Lockheed
Honda
£1,058m
Asia
15%
Americas
38%
£2,634m
EADS
(Airbus)
8%
Ford
6%
Other
42%
Europe
47%
£3,212m
VW Group
8%
BMW Group
2%
Toyota
Volvo Cars
Mitsubishi Group
2%
3%
2%
*excluding Volvo Aero
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GKN OVERVIEW PRESENTATION 2013
GM Group
6%
Renault
Nissan
6%
Fiat Chrysler
Boeing 5%
4%
United
Technologies
3%
Tata Group
3%
GKN Driveline
Sales by region
Asia
29%
Unrivalled capability – global no 1
Europe
37%
Americas
34%
Sales by customer
VW
15%
Other
24%
RenaultNissan
11%
Tata Group
5%
Fiat
Chrysler
10%
Volvo Cars
4%
Mitubishi
Group
5%
Toyota
Group
6%
Ford
Group
10%
GM
Group
10%
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GKN OVERVIEW PRESENTATION 2013
GKN Driveline – sales by product segment 2012
CVJ Systems (sideshafts)
Used on approx. 85% of light vehicles
CVJ Systems
Global market leader with around 41% share
AWD Systems/Trans Axle Solutions
AWD Systems
AWD/4WD is 14% of market
Differentials on 100% of vehicles
Broad range of products, technology and competition
2012
£3,236m
TransAxle
Solutions
eDrive Systems
eDrive Systems
Nascent market segment
Other
Long-term growth expected
Product development focus
CVJ Systems
(sideshaft)
All-wheel drive
(PTU disconnect)
TransAxle
Solutions
(eLocker)
Global leader in driveline systems and solutions
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GKN OVERVIEW PRESENTATION 2013
eDrive
(eAxle)
Global light vehicle growth forecast to continue
Europe
120
CAGR
2012-2017
7
6
Vehicles (m)
Vehicles (m)
100
80
60
Germany
1.1%
4
France
0.5%
3
UK
1.2%
2
Italy
3.0%
1
Spain
6.5%
5
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
40
Americas
14
20
CAGR
2012-2017
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
CAGR
2012-2017
5.1%
Americas
3.5%
Europe
2.8%
RoW
7.6%
Global
Source: IHS Automotive Forecast, January 2013
4.3%
10
US
8
6
4
2
3.1%
Canada
-4.4%
Mexico
6.2%
Brazil
5.9%
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
30
Asia
25
Vehicles (m)
Asia
Vehicles (m)
12
20
15
CAGR
2012-2017
China
8.7%
Japan
-2.9%
India
10.0%
10
S Korea
-0.8%
5
Thailand
3.5%
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
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GKN OVERVIEW PRESENTATION 2013
GKN Driveline – summary
Key growth drivers
Outperformance of the global CVJ business
Broadening customer and product base in AWD and Transaxle products
New product opportunities for drivetrain electrification
China as a special market in which to grow our presence
Strong relationships with customers underpin sustainability
Exceptionally well positioned to outperform global markets
Targeting 2% to 3% outperformance relative to market
Target margin range of 8% to 10% (2012: 7.3%)
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GKN OVERVIEW PRESENTATION 2013
GKN Powder Metallurgy
Hoeganaes
GKN Sinter Metals
Powder
production
Component
manufacture
220,000 tons of powder
per year
Six billion parts
per year
Plenty of applications
US no 1 and 22%
global share
World no 1
18% global share
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GKN OVERVIEW PRESENTATION 2013
Customers
Over 3,000 customers
globally
75% automotive
GKN Powder Metallurgy
Divisional sales by region
of origin
Sinter Rest of
world
8%
Global PM market share
Hoeganaes
17%
Sinter
Europe
35%
Hitachi
6%
2%
Trading margin: 10.0%
2%
3%
3%
Miba
4%
Porite
5%
Metaldyne
5%
Top seven cover more
than 50% of the market
GM
7%
Fiat
Chrysler
4%
ZF
5%
Sumitomo
7%
Fine Sinter
6%
2%
2012 sales: £874m
Ford
10%
GKN
18%
Others
(<2%)
37%
Sinter
Americas
40%
GKN Sinter Metals
Sales by customer
Other
62%
VW Group
3%
Hilite
4%
Bosch
2%
Top eight customers
cover a third of business
12% industrial customers
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GKN OVERVIEW PRESENTATION 2013
Linamar
3%
Accelerated trend towards design for PM
Key growth drivers
Automotive products
Fuel efficiency
Reduced emissions
Electrification
Differential gears
P-Rotor Pump components
Torque converter
Weight and space saving
Sales by product type
Variable valve timing components
Magnetic clutches
Industrial products
Hoeganaes
17%
Sintered
components
- industrial
10%
Sintered
components
- automotive
73%
Connecting rod
Pneumatic silencer
Rotor parts
Surgical instruments
Parts for prosthetic knee joints
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GKN OVERVIEW PRESENTATION 2013
GKN Powder Metallurgy – summary
Key growth drivers
Value of PM content per vehicle outgrowing market
Continued market growth in Europe and North America with accelarated growth in
India, Brazil and China
Increasing penetration in industrial markets
Unique parts and powder position supports rapid exploitation of design for PM
Bolt on acquisition potential to strengthen global positioning and new
technology
GKN Powder Metallurgy targets growth 2%-3% above market with
continued margin expansion (2012: 10.0%; target range 9-11%)
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GKN OVERVIEW PRESENTATION 2013
GKN Aerospace - markets and customers
Market
Business
Mix
Sector
Customer base
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GKN OVERVIEW PRESENTATION 2013
GKN Aerospace – World class product portfolio
J-UCAS Fuselage
B747-8 Exhaust
A380 Fixed Trailing Edge
A350XWB Rear Spar
B787 Cabin Windows
B787 Anti-icing System
V22 Fuel Tanks
CH53K Aft Fuselage
A400M Engine Intake
F35 Canopy
A330 Flap Skins
B787 Floor Grid
B787 Inner Core Cowl
Engine
Structures
Fuel Transportation
Engine
Rotatives
AW101 Canopy
Silicone Seals
B767 Winglet
Flying
Surfaces
HondaJet Fuselage
Fuselage
Sections
Ariane 5 Exhaust nozzle
Nacelle &
Pylon
Full Engine MRO & Support
Engine Products &
Services
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GKN OVERVIEW PRESENTATION 2013
HondaJet Cockpit
Window
Transparencies
& Coatings
Fuel tanks
Protection
Systems
GKN Aerospace – well positioned for the future
Ship set values $m
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GKN OVERVIEW PRESENTATION 2013
Changing shape of the business
Customer sales
Sales by market
Americas
18%
Europe
12%
Honeywell, 3%
Others, 19%
Bombardier,
2%
Americas
17%
Airbus Civil,
28%
Spirit, 3%
Europe
53%
Rolls-Royce
4%
GE, 8%
UTC, 13%
Military 30%
Civil 70%
Boeing
Military,
11%
Lockheed, 5%
2012 figures include pro forma Volvo Aero
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GKN OVERVIEW PRESENTATION 2013
Airbus
Military
1%
Boeing
Civil
3%
Summary – GKN Aerospace
Proven track record of growth and margin progression into 11% - 13% range (2012: 11.2%,
excluding Volvo Aero)
Strong position on existing programmes with increasing build rates
New programmes now set to ramp-up production
Technology development remains a focus and is positioning GKN for future programmes
Volvo Aero acquisition brings strong engine component technology and good positions on
most engine programmes
GKN Aerospace is now ranked no. 3 globally on both aerostructures and aero-engine
components
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GKN OVERVIEW PRESENTATION 2013
GKN Land Systems
Sales: £933m
Market leading positions
Power Take Off (PTO)
Shafts
Powertrain
Services &
Solutions
23%
World no.1 global
supplier of agricultural
take off shafts
World no.1 global
supplier of offhighway wheels
Power
Management
41%
High Speed Shafts
Wheels &
Structures
36%
Wheels
World no.1 global
supplier of high
speed primary
driveshafts
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GKN OVERVIEW PRESENTATION 2013
Clutches and Brakes
World no.1 global
supplier of dual
clutch industrial
transmissions
GKN Land Systems – integrated Powertrain components
Clutches
PTO shafts
Gearboxes
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GKN OVERVIEW PRESENTATION 2013
GKN Land Systems
Sales by market
Sales by region of origin
Sales by customer
RoW
3%
John Deere
Case New
9%
Holland
7%
Construction
& Mining
11%
Agriculture
39%
Tata
5%
Americas
23%
Industrial
27%
Europe
74%
Commercial
Vehicles & Cars
23%
Other
63%
Caterpillar
4%
Claas
4%
Agco 3%
Ford Group
2%
JCB
VW Group 2%
1%
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GKN OVERVIEW PRESENTATION 2013
GKN Land Systems - summary
A strong market focused growth platform in place
Key growth drivers
Leverage customer relationships to expand in existing markets
Rapid geographic expansion
Moving into new markets – industrial and renewables
Development of aftermarket capability across markets
Exploit Group technology and develop market leadership in electro
mechanical power management
Targeting organic growth 3% to 4% above global market and expanding
margin into target range of 8-11% (2012: 9.4%)
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GKN OVERVIEW PRESENTATION 2013
GKN summary
Well positioned to deliver sustainable growth following the
completion of significant restructuring initiatives
Delivering shareholder value through a balance of
Growth in excess of the markets
Improving margins
Return on invested capital
Additional growth through strategic, bolt-on acquisitions with the
purpose of adding capability, market position and global footprint
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GKN OVERVIEW PRESENTATION 2013
Disclaimer
Cautionary statement
This presentation contains forward looking statements which are made in good faith
based on the information available to the time of its approval. It is believed that the
expectations reflected in these statements are reasonable but they may be affected
by a number of risks and uncertainties that are inherent in any forward looking
statement which could cause actual results to differ materially from those currently
anticipated. Nothing in this document should be regarded as a profits forecast.
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GKN OVERVIEW PRESENTATION 2013