Overview and introduction - GKN Group Overview Presentation 2016 7 GKN Aerospace – world class...

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  • GKN Overview and introduction 23 February 2016

  • 2 GKN Overview Presentation 2016

    GKN Aerospace

    A leading first tier supplier to the

    global aerospace industry.

    A Tier 1 Supplier to the major OE manufacturers in Automotive, Aerospace and Land Systems markets

    GKN Driveline

    The world leading supplier of

    automotive driveline systems

    and solutions.

    GKN Powder Metallurgy

    One of the worlds largest

    manufacturers of metal powder

    and sintered components.

    GKN Land Systems

    A leading supplier of engineered

    power management products,

    systems and services.

    2015 - Sales by division

    Driveline (46%)

    3,548m

    Aerospace (33%)

    2,500m

    Land Systems (9%)

    693m

    Other (0%)

    42m

    All group financial data in this document relates to 2015 unless otherwise stated. Figures are presented on a management basis.

    Powder Metallurgy (12%)

    906m

    Global engineering group

    Sales of 7.69 billion in 2015

    56,000 people in more than 30 countries

  • 3 GKN Overview Presentation 2016

    Our strategy

    Creating long-term

    shareholder value

    Four strong

    divisions

    Lead in chosen markets

    Leverage global footprint

    Technology driving margin

    Operational excellence

    Increasing cash flow,

    EPS and dividends

    BUSINESS

    PERFORMANCE

    Growth target:

    Above market

    Group target:

    8-10%

    Target: 20%

    Sustain above

    market growth

    Cash Flow

    Growth

    ROIC Margin

    Five strategic

    objectives

  • 4 GKN Overview Presentation 2016

    Key financial metrics

    6%8%9%

    11%

    FY2011

    FY2012

    FY2013

    FY2014

    FY2015

    0m

    200m

    400m

    FY2011

    FY2012

    FY2013

    FY2014

    FY2015

    Sales

    7,689m

    Margin

    8.8% 16%18%

    20%

    FY2011

    FY2012

    FY2013

    FY2014

    FY2015

    ROIC

    17.8%

    Free Cash

    Flow

    370m

    Net Debt

    769m

    EPS

    27.8p 20p25p

    30p

    FY2011

    FY2012

    FY2013

    FY2014

    FY2015

    Dividend

    8.7p 4p7p

    10p

    FY2011

    FY2012

    FY2013

    FY2014

    FY2015

    0m

    500m

    1,000m

    FY2011

    FY2012

    FY2013

    FY2014

    FY2015

    PBT

    603m 400m550m

    700m

    FY2011

    FY2012

    FY2013

    FY2014

    FY2015

    Figures are presented on a management basis.

    5,000m

    6,500m

    8,000m

    FY2011

    FY2012

    FY2013

    FY2014

    FY2015

  • 5 GKN Overview Presentation 2016

    Airbus 20%

    UTC 13%

    GE 13% Boeing

    11% Snecma 6%

    Honeywell 4%

    Spirit 4%

    Rolls-Royce 4%

    Lockheed 3%

    Others 22%

    GKN Aerospace Sales by Customer 2015

    75% Commercial

    25% Military

    GKN Aerospace Sales by market 2015

    1,116m (47%)

    Engine components and sub-systems

    1,128m (47%)

    Aerostructures

    143m (6%) Special

    products

    GKN Aerospace (excluding Fokker) Sales by product 2015

    GKN Aerospace at a glance

    16,700 employees

    62 manufacturing

    locations

    14 countries

    Sales: 2.50bn

    GKN Aerospace is a leading global tier one

    supplier of airframe and engine structures, landing

    gear, electrical interconnection systems,

    transparencies and aftermarket services. It

    supplies products and services to a wide range of

    commercial and military aircraft and engine prime

    contractors and other tier one suppliers.

    Includes 2 months of Fokker Sales 113m

  • 6 GKN Overview Presentation 2016

    25%

    20% 30%

    25%

    GKN Aerospace Fokker Technologies

    Airbus A350

    Acquisition completed 28 October 2015

    Fokker increases scale of division by c20%

    Enhances GKN market leadership and positions on key growth platforms

    No.2 Aerostructures Sales

    No.3 Electrical wiring systems

    Additional content on A350 and F-35

    Extends global footprint

    China, Turkey, India & Mexico

    Expands technology and product capabilities

    Aerostructures 45%

    Electrical 20%

    Services 21%

    SABCA 9%

    Landing Gear 5%

    Sales by sub-division Revenue by customer

    22%

    17%

    17%

    16%

    12%

    5%

    8%

    Boeing

    Other

    Airbus

    Lockheed

    NHI

    Bombardier Gulfstream

    Dassault

    3%

    Revenue by end-market

    Commercial Services

    Military Business

    Jets

  • 7 GKN Overview Presentation 2016

    GKN Aerospace world class product portfolio

    AEROSTRUCTURES ENGINE SYSTEMS SPECIAL PRODUCTS LANDING GEAR WIRING INTER-

    CONNECT SYSTEMS

    GLOBAL SERVICES

    GLOBAL

    NO. 2

    GLOBAL

    NO. 2

    GLOBAL

    NO. 1

    GLOBAL

    NO. 8

    GLOBAL

    NO. 3

    GLOBAL

    BRAND

    Fuselage, wing, nacelle & pylon,

    Inflight opening doors and empennage (tails)

    Static & rotating structures

    Titanium engine inlet parts

    Transparencies

    Ice protection systems

    Flotation devices

    Fuel tanks

    Helicopter Landing Gear

    Composite load carrying landing gear components (drag brace)

    Availability Services, MRO, Conversion and Completion for Mature and Legacy aircraft

    Electrical Wiring Interconnection Systems (EWIS) for aircraft & aircraft engines

  • 8 GKN Overview Presentation 2016

    GKN Aerospace portfolio

    Reven

    ue p

    er

    Air

    cra

    ft

    Declining Stable Growing

    A320

    B737MAX

    A350

    B787

    A330

    A380

    Black Hawk A400M

    C130J

    JSF

    CH53-K

    G650 HTF7000

    F/A-18

    Commercial

    Military

    $6-9 million

    $3-6 million

    $0-3 million

    B777X

    http://www.google.co.uk/url?sa=i&source=imgres&cd=&cad=rja&uact=8&ved=0CAgQjRwwAGoVChMIxK2ziLrdxgIVi9YUCh0P9wkP&url=http://www.gulfstream.com/aircraft/gulfstream-g650&ei=fXymVYT7CYutU4_up3g&psig=AFQjCNH9zUeu213TYWnNYLJ-Rz2WMPHVBw&ust=1437060605315919http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRxqFQoTCJCRudK83cYCFWQs2wod72UNkg&url=http://www.navy.mil/navydata/aircraft/fa18/shornet.html&ei=MX-mVdC0E-TY7Abvy7WQCQ&bvm=bv.97653015,d.d24&psig=AFQjCNF4qy0oYfMh8vAcQmCSs9yOLzZ8IQ&ust=1437061286930347

  • 9 GKN Overview Presentation 2016

    GKN Aerospace - summary

    Key growth drivers

    Commercial (75% of sales)

    Strong position on existing programmes

    with increasing build rates from 2016/2017

    New programmes ramping up

    production Boeing 787, A350

    Military (25% of sales)

    Ending of older military

    programmes (C17, F/A-18) will

    present a headwind before new

    programmes ramp up (F-35)

    Good technology aim to win new positions on growth programmes

    Integration of Fokker proceeding well

    F-35 Joint Strike Fighter

    Airbus A380

    Boeing 737 MAX

    Airbus A350

  • 10 GKN Overview Presentation 2016

    CVJ Systems 60%

    AWD & eDrive Systems

    40%

    GKN Driveline Sales by product 2015

    GKN Driveline at a glance

    26,300 employees

    46 manufacturing

    locations

    23 countries

    Sales: 3.55bn

    GKN Driveline is the worlds leading supplier of

    automotive driveline systems and solutions. As a

    global business serving the leading vehicle

    manufacturers, it develops, builds and supplies

    an extensive range of automotive driveline

    products and systems for use in everything

    from the smallest low-cost car to the most

    sophisticated premium vehicle demanding

    complex driving dynamics.

    Fiat Chrysler,

    14%

    VW Group, 13%

    GM Group, 11%

    Ford Group, 11% Renault-

    Nissan, 10%

    Toyota Group, 7%

    BMW, 5%

    Tata, 5%

    Mitubishi Group, 3%

    Other, 21%

    GKN Driveline Sales by customer 2015

    Europe 36%

    Americas 37%

    Rest of World 27%

    GKN Driveline Sales by region 2015

    Source: IHS Automotive, February 2016

  • 11 GKN Overview Presentation 2016

    GKN Driveline - a complete driveline solution

    Leadership in all major product lines

  • 12 GKN Overview Presentation 2016

    GKN Driveline summary

    Key growth drivers

    CVJ unrivalled global footprint and increasing global platforms

    AWD increased content per vehicle and broadening customer base

    China is a special market for AWD growth

    Well positioned to outperform global markets - targeting 2% above

    Maintain margin above 8%

  • 13 GKN Overview Presentation 2016

    GKN Powder Metallurgy at a glance

    6,600 employees

    32 locations

    9 countries

    Sales: 906m

    GKN Powder Metallurgy comprises GKN Sinter

    Metals and Hoeganaes. GKN Sinter Metals is the

    worlds leading manufacturer of precision automotive

    sintered components as well as components for

    industrial and consumer applications. Hoeganaes is

    one of the worlds leading manufacturers of metal

    powder, the essential raw material for powder

    metallurgy.

    >80% of sales to Automotive Sector

    Sinter Americas 43%

    Sinter Europe 33%

    Sinter Rest of world

    8%

    Hoeganaes 16%

    GKN Powder Metallurgy Sales by region 2015

    Global PM Market Share

    Ford 9%

    GM 7%

    Hilite 5%

    Fiat Chrysler 4%

    Linamar 3%

    ZF Group 3%

    Borg Warner 2%

    Schaeffler 4%

    VW Group 2%

    Bosch 2%

    Other 59%

    GKN Powder Metallurgy Sales by customer 2015

    GKN PM 18%

    Sumitomo 9%

    Hitachi PM 6%

    Fine Sinter 5%

    Miba 5%

    Porite 4% PMG 4%

    Metaldyne 4%

    Schunk 3% Ames 2%

    Stackpole 2%

    Others 38%

  • 14 GKN Overview Presentation 2016

    Energy efficiency Renewable energy Reduced Emissions

    VVT

    (CAM PHASING)

    START/STOP

    EPS (ELECTRIC

    POWER STEERING)

    ALUMINIUM CARRIER

    7+ SPEED TRANSMISSIONS

    TRANSMISSION

    GEARS

    GKN Powder Metallurgy - Automotive trends driving Design for PM

    VARIABLE VANE

    PUMPS

    Fuel efficiency Electrification Lightweight

  • 15 GKN Overview Presentation 2016

    GKN Powder Metallurgy summary

    Key growth drivers

    Value of PM content per vehicle outgrowing market

    Continued market growth in Europe and North America with accelerated growth

    in India and China

    Increasing penetration in industrial markets

    Unique parts and powder position supports rapid exploitation of Design

    for PM

    Additive layer manufacturing / 3D printing complementary process and

    investing in high technology powders eg. alloyed tool steels, nickel based

    alloys, stainless steel and titanium

    Targets growth of 2% above market with continued margin expansion

  • 16 GKN Overview Presentation 2016

    Europe 76%

    Americas 20%

    Rest of World 4%

    GKN Land Systems Sales by Region 2015

    Agriculture 45%

    Industrial 24%

    Automotive 10%

    Structures 9%

    Construction & Mining

    12%

    GKN Land Systems Sales by market 2015

    GKN Land Systems at a glance

    5,000 employees

    23 locations

    10 countries

    Sales: 693m

    GKN Land Systems is a leading supplier of power

    management products and services. It designs,

    manufactures and supplies products and services for

    the agricultural, construction, mining and utility vehicle

    markets and key industrial segments, offering

    integrated powertrain solutions and complete in-

    service support.

    Other 62%

    GKN Land Systems Sales by customer 2015

    Caterpillar 4%

    Claas 4%

    John Deere 9%

    Case New Holland 7%

    Tata 6%

    Agco 3%

    JCB 2%

    VW 1%

    Toyota Group 1%

    Agri-Italia/Carraro 1%

  • 17 GKN Overview Presentation 2016

    GKN Land Systems integrated Powertrain components

    PTO shafts

    Gearboxes

    Clutches

    World no 1 global supplier of agricultural power take off

    shafts and high speed primary driveshafts

    A leading global supplier of clutch and brake solutions

    A leading global supplier of off-highway wheels

  • 18 GKN Overview Presentation 2016

    Key growth drivers

    Continued industrialisation of agriculture and urbanisation provide good

    underlying market fundamentals

    Leveraging customer relationships to increase content per vehicle

    Geographic and product expansion China and North America

    Exploit Group technology and develop market leadership in electro mechanical

    power management

    Targeting organic growth above global market; margin currently depressed due

    to weak agricultural equipment and construction markets

    GKN Land Systems - summary

  • 19 GKN Overview Presentation 2016

    GKN summary

    Delivering shareholder value through a balance of:

    Growth in excess of the markets

    Improving margins

    Return on invested capital

    Increasing cashflow and dividends

    Additional growth through strategic,

    bolt-on acquisitions - adding capability,

    market position and global footprint

    Well positioned to deliver sustainable growth

    Growth

    ROIC Margin

    Cash Flow

    Financial

    Metrics

  • 20 GKN Overview Presentation 2016

    Disclaimer

    Cautionary statement

    This presentation contains forward looking statements which are made in good faith

    based on the information available at 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.