Berenberg European Conference, Tarrytown, USA An introduction to GKN 24 May 2017 | Guy Stainer | Investor Relations Director
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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.
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Our strategy
Creating long-term shareholder
value
Three 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
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Leading market positions
Additive
Manufacture
Emerging
Driveshafts
Global
#1
AWD
Global
#1
eDrive
Global
#1
PM Components
Global
#1
Powders
Global
#2
Additive
manufacture (with GKN Aerospace)
EMERGING
Aerostructures
Global
#2
Engine Systems
Global
#2
Electrical Wiring
Global
#3
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Aerostructures £1,706m
50%
Engines £1,239m
36%
Special products £311m
9%
Services, £168m
5%
GKN Aerospace Sales by product 2016
Airbus 19%
Boeing 12%
UTC 10%
GE 9%
Lockheed 7%
Snecma 4% Rolls-Royce 3%
Gulfstream 3%
Honeywell 3%
Others 30%
GKN Aerospace Sales by customer 2016
74% Commercial
26% Military
GKN Aerospace Sales by market 2016
GKN Aerospace – at a glance
17,950 employees
55 manufacturing locations
14 countries
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. Sales: £3.42bn
Trading Profit: £339m
Trading Margin: 9.9%
ROIC: 14.6%
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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
C-Series
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93.0 94.8
96.1
98.6
101.4 103.2
104.9
2016 2017 2018 2019 2020 2021 2022
Mil
lio
ns
of
Veh
icle
s
CVJ Systems 61%
AWD & eDrive Systems
39%
GKN Driveline Sales by product 2016
GKN Driveline – at a glance
28,100 employees
49 manufacturing locations
23 countries
GKN Driveline is the world’s 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, 13%
VW Group, 12%
Ford Group, 11%
GM Group, 10% Renault-Nissan,
9%
Toyota Group, 7%
Tata, 5%
BMW, 4%
Geely Group, 4%
Other, 25%
GKN Driveline Sales by customer 2016
Europe 37%
Americas 36%
Rest of World 27%
GKN Driveline Sales by region 2016
Source: IHS Automotive, February 2016
Sales: £4.22bn
Trading Profit: £323m
Trading Margin: 7.7%
ROIC: 19.2%
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GKN Driveline - a complete driveline solution
Leadership in all major product lines
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BMW 2 series Active Tourer
2002
Nissan Cube
Peugeot 3008 HY4
Porsche 918 eSpyder BMW i8
Unmatched real-world experience in eDrive
History of delivering hybrid electric systems
300,000 vehicles on the road today, using GKN eDrive technology – many more to come.
Volvo XC90
2016
FIAT 500e
2012
Mitsubishi Outlander
BMW X1
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Sinter Americas 42%
Sinter Europe 34%
Sinter Rest of world 9%
Hoeganaes 15%
GKN Powder Metallurgy Sales by region 2016
Ford 9%
GM 8%
Schaeffler 5%
Fiat Chrysler 4%
Hilite 4%
ZF Group 4%
Linamar 3%
Borg Warner 3%
Bosch 2%
Other 58%
GKN Powder Metallurgy Sales by customer 2016
GKN Powder Metallurgy – at a glance
6,900 employees
33 locations
9 countries
GKN Powder Metallurgy comprises GKN Sinter Metals and Hoeganaes. GKN
Sinter Metals is the world’s leading manufacturer of precision automotive sintered
components as well as components for industrial and consumer
applications. Hoeganaes is one of the world’s leading manufacturers of metal
powder, the essential raw material for powder metallurgy.
>80% of sales to Automotive Sector
Global PM Market Share
GKN PM 18%
Sumitomo 9%
Hitachi PM 6%
Fine Sinter 5%
Miba 5%
Porite 4% PMG 4%
Metaldyne 4%
Schunk 2% Ames 2%
Stackpole 2%
Others 39%
Sinter Metals
Components
Hoeganaes
Powder
GKN Powder
Metallurgy
Sales: £1.03bn
Trading Profit: £118m
Trading Margin: 11.4%
ROIC: 21.0%
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GKN Powder Metallurgy - Automotive trends driving Design for PM
Energy efficiency Renewable energy Reduced Emissions
VVT
(CAM PHASING)
START/STOP
EPS (ELECTRIC POWER
STEERING)
ALUMINIUM CARRIER
7+ SPEED TRANSMISSIONS
TRANSMISSION
GEARS
VARIABLE VANE
PUMPS
Fuel efficiency Electrification Lightweight
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Results summary
2016
£m
2015
£m
Change
%
Sales 9,414 7,689 22
Trading profit 773 679 14
Trading margin (%) 8.2 8.8 (60) bps
Profit before tax 678 603 12
Earnings per share (p) 31.0 27.8 12
Dividend per share (p) 8.85 8.7 2
2% organic growth
Margin excluding restructuring of 8.6%
Final dividend 5.9p
£39m 2016 restructuring programme
Tax rate 24%
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Sharpening focus – on three divisions
Leader in robust and growing end markets
Geographically diversified
Key technology partner
Operational excellence
Q1 trading update showed good progress with organic
sales growth and margin improvement
In summary
GKN – a great heritage with an exciting future
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Appendices
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Global engineering group
Sales of £9.4 billion in 2016
58,000 people in more than 30 countries
Tier 1 Supplier to the major Automotive and Aerospace OE manufacturers
2016 - Sales by division
Driveline (45%)
£4,216m
Aerospace (36%)
£3,423m
Land Systems (8%)
£704m
Other (0%)
£39m
GKN Aerospace
A leading first tier
supplier to the global
aerospace industry.
GKN Driveline
The world leading
supplier of automotive
driveline systems
and solutions.
GKN Powder
Metallurgy
One of the world’s
largest manufacturers
of metal powder and
sintered components.
All group financial data in this document relates to 2016 unless otherwise stated. Figures are presented on a management basis.
Powder Metallurgy
(11%)
£1,032m
2016 – Trading Profit by division
Driveline (40%)
£323m
Aerospace (43%)
£339m
Land Systems (2%)
£18m
Other (0%)
£4m loss
Powder Metallurgy
(15%)
£118m
GKN Land Systems ceased to exist from 1 January
2017, following sale of Stromag in December 2016
− Shafts and Services => GKN Driveline
− Wheels and Structures => Other businesses
Excludes £21m corporate costs
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Strong undercurrents driving our markets
…increasingly urban and Asian …and ageing
Environmental
New technologies …additive manufacture …and digital manufacturing
…fuel efficiency/lightweight …and electrification/automation
Rising population
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GKN Aerospace technology roadmap
Wing of the future
Thermoplastic materials
Structures
Composite engine
components
Blisks
Engine systems
Electric aircraft initiative
Electrical systems
Developing additive manufacture components in engines and structures
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GKN Aerospace - summary
Key growth drivers
Commercial (74% of sales)
− Strong position on re-engined programmes with increasing build rates - A320neo, Boeing 737
MAX
− New programmes ramping up production - A350, C-Series
− Wide-body production reducing Boeing 777, A380
− Engine investment continues - P&W Geared Turbo Fan, Rolls-Royce XWB
Military (26% of sales)
− Decline of older military programmes (F/A-18, F/A-15, Black Hawk) being offset by new
programmes (F-35)
Good technology – aim to win new positions on growth programmes
F-35 Joint Strike Fighter
Boeing 737 MAX
Airbus A350
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GKN Driveline technology roadmap
Optimised in-line AWD
Modular design
All-wheel drive
eAxle
eTransmission
eDrive
VL3 System
CVJ
Continuous development of software and integration capabilities
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GKN Driveline – summary
Driveshafts
Clear #1 – 42% share
Unrivalled global footprint and
increasing global platforms
Maintaining technical leadership
Winning key business
All-Wheel Drive
Leading position
Increased content per vehicle and
broadening customer base
Moving from components to
designing full systems
Increasingly includes software
eDrive
Electric AWD (eAxle) offers further
opportunity for additional content
per vehicle
Global eAxle leadership
Developing eDrive technology
and footprint
Advanced VL3
CVJ is winning
new business
and is a PACE
Award finalist
Volvo XC90
with GKN
eAxle
Source: IHS
Driveline for the
FIAT 500X /
Jeep Renegade
is designed and
built by GKN
CVJ =100 AWD = 800 eDrive = 1250 - 2000
Typical content per vehicle - index
GKN Driveline Growth vs Market
6.6%
3.9%
1.9%
1.4%
GKN Driveline SalesGrowth (2012-2016)
Market AverageGrowth (2012-2016)
Market GrowthForecast (2017)
Market GrowthForecast (2018)
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GKN Powder Metallurgy technology roadmap
Rolled gears
Off-tool high
precision
Complex products
Advanced powders
Design for additive
manufacture
New markets Strong technology
System design capabilities
Modelling and simulation
eMotor
products
Advanced tools and presses plus strong process development
BERENBERG EUROPEAN CONFERENCE,USA – 24 MAY 2017