Introduction to GKN. Wednesday 11 September Guy Stainer

Transcription

1 Introduction to GKN Wednesday 11 September 2013 Guy Stainer

2 Strategy Four strong divisions Creating long-term shareholder value Lead in chosen markets Growth target: Above market Leverage global footprint Technology driving margin Operational excellence Margin Group target: 8-10% BUSINESS PERFORMANCE ROIC Target: 20% Sustain above Increasing cashflow, EPS and dividends market growth Investor Visit Introduction to GKN 11 September

3 Financial overview 2012* Sales Profit before tax ROIC 6,904m 2011: 6,112m 493m 2011: 417m 18.0% 2011: 18.3% Earnings per share Total dividend Net debt 26.3p 2011: 22.6p 7.2p 2011: 6.0p 871m 2011: 538m *Numbers presented on a management basis, 2012 restated for IAS19 revised Investor Visit Introduction to GKN 11 September

4 The changing shape of GKN Rebalancing profit contributions Top 10 customers c.50% Group Sales Land Systems GE Boeing VW Driveline UTC Ford Aerospace Powder Metallurgy EADS JLR/ Tata Fiat/ Chrysler Renault / Nissan GM Automotive Aerospace Source: 2013 consensus trading profit Source: Pro forma 2012 sales Investor Visit Introduction to GKN 11 September

5 GKN Driveline An excellent global footprint GKN Driveline end billion Sales c.22,000 Employees 45 Plants 22 Countries Mexico United States U.K. France Spain Italy Slovenia Turkey Sweden Poland Germany India China Thailand South Korea Taiwan Japan Manufacturing plant Joint Venture Colombia Singapore Malaysia Corporate office / Engineering centre Brazil Australia Investor Visit Introduction to GKN 11 September

6 Substantial growth opportunities in global markets Light vehicle production by region (million units) CAGR North America Europe 2.2% 4.0% US & Canada Mexico West Europe East Europe Russia 5.2% Japan -0.4% S. Korea 0.4% China South America India ASEAN 6.4% 10.2% % % Source: IHS Automotive LV forecast Feb. 2013, GKN analysis. Investor Visit Introduction to GKN 11 September

7 Leading positions in our core product segments CVJ Sideshafts GKN NTN Nexteer Hyundai WIA Wanxiang/Neapco Propshafts GKN Dana IFA Rotorion American Axle JTEKT AWD PTU/FDU AWD Couplings Performance Diffs Electric Axle* GKN Magna Dymos Hyundai Wia American Axle JTEKT BorgWarner GKN Honda Magna (inc. WIA JV) GKN Eaton American Axle Dana JTEKT GKN Magna American Axle BorgWarner Linamar Source: GKN estimated rankings on 2013 basis; excludes in-house. *Emerging product segment Investor Visit Introduction to GKN 11 September

8 Balanced global footprint with rising AWD contribution Sales by region of origin 2012 Asia 29% Europe 37% CVJ Systems Americas 34% All-Wheel Drive 61% of Sales 39% of Sales Investor Visit Introduction to GKN 11 September

9 Vehicle segment and platform trends Global light vehicle production by segment Sub-Mini (A) Small (B) Lower Med. (C) Upper med. (D) Executive (E) MPV SUV 2007 (70.6m) 2013 (82.7m) 2018 (103.6m) Share of Growth % 17% 22% 7% 3% 9% 19% Million vehicles The rise of mega-platforms % 29% 39% 28% 21% 52% 27% 15% 58% Other Large platforms 500k-1m Mega platforms 1m+ Pickup LCV's Light Vehicle Production (m) 4% 10% Small and medium platforms outperform due to Asia influence SUVs drive continuing AWD growth Mega-platforms an important driver Source: IHS Automotive LV Forecast February 2013 Investor Visit Introduction to GKN 11 September

10 Positioned to continue outperforming the market Global LV market growth Mega-platforms and AWD growth and content Mega-platforms AWD systems content GKN Driveline target growth c.2% ahead of market Unrivalled global positioning Geographic footprint Broad customer base Strength in growth markets Technology leadership / increasing AWD content Response to tighter legislation Customer co-developments Fuel-efficient products Globally competitive Increasingly lean and agile cost structure Investor Visit Introduction to GKN 11 September

11 GKN Powder Metallurgy the industry leader Hoeganaes Powder production 240,000 tons of powder per year Sinter Metals Component manufacture 6 billion parts per year many applications Diverse customer base 75% automotive/ 25% industrial Global # 2 22% global share Global # 1 18% global share 3,000 customers globally Investor Visit Introduction to GKN 11 September

12 Design for PM Drives margins is the design and application of products using the unique characteristics of powder metal to produce parts which cannot be made economically using alternative technologies. Investor Visit Introduction to GKN 11 September

13 Accelerated trend towards design for PM Key growth drivers Automotive products Fuel efficiency Reduced emissions Electrification P-Rotor Pump components Differential gears Torque converter Weight and space saving Sales by product type Hoeganaes 17% Variable valve timing components Industrial products Magnetic clutches Sintered components - industrial 10% Sintered components - automotive 73% Connecting rod Pneumatic silencer Surgical instruments Parts for prosthetic knee joints Rotor parts Investor Visit Introduction to GKN 11 September

14 Footprint in high growth markets Million Vehicles Brasil Russia India China Mexico Growing presence and capability in the key emerging markets Brazil Today # 2 Plan for Expansion in 2014 India Today # 1 Extending Capacity New Greenfield plant under review China Today # # 2 Expansion of existing facility New plant opening Q4/2013 Develop powder capability Mexico and Russia under review Investor Visit Introduction to GKN 11 September

15 GKN Powder Metallurgy market outperformance LV Market Global LV market growth m vehicles PM market growth driven by new technology trends m PM Market GKN Powder Metallurgy outperformance c.3% above LV market Unique Design for PM capability Innovative design Technically enhanced powders Advanced process technology Global manufacturing and engineering footprint Product and process engineering capability in all regions Growing presence in high growth markets Market Share Gain Market concentration ongoing Mega-platforms awarded to global PM players Investor Visit Introduction to GKN 11 September

16 GKN Aerospace Sales $3.5 billion 35 sites, 12,000 people World-class product portfolio % of 2012 Pro-forma sales 53% Aerostructures Wing; Fuselage GKN Aerospace North America 42% Engine Systems & Structures Nacelle & GKN Pylon; Aerospace Engine systems and services Europe 5% Special products Transparencies and Protection Systems Aerospace North America Aerospace Europe & Special Products Group Aerospace Engine Systems (Volvo Aero) Investor Visit Introduction to GKN 11 September

17 GKN Aerospace - markets and customers Market Business Mix Sector Customer base Investor Visit Introduction to GKN 11 September

18 GKN Aerospace World class product portfolio A380 Fixed Trailing Edge J-UCAS Fuselage B747-8 Exhaust B787 Cabin Windows B787 Anti-icing System A350XWB Rear Spar CH53K Aft Fuselage A400M Engine Intake V22 Fuel Tanks F35 Canopy A330 Flap Skins B787 Floor Grid B787 Inner Core Cowl Engine Structures Engine Rotatives AW101 Canopy Fuel Transportation Silicone Seals B767 Winglet HondaJet Fuselage Ariane 5 Exhaust nozzle Full Engine MRO & Support HondaJet Cockpit Window Fuel tanks Flying Surfaces Fuselage Sections Nacelle & Pylon Engine Products & Services Transparencies & Coatings Protection Systems Investor Visit Introduction to GKN 11 September

19 Well balanced portfolio Sales by market 2012 Commercial Military Commercial 30% Large commercial aircraft record order backlog (8,500 aircraft, >$1 trillion) 30,000 aircraft forecast to be delivered 2013 to 2032 Military 70% Worldwide defence spending remains subject to budget cutbacks External forecasts Military split US 87% Europe 13% Note: Engine Systems proforma 12 months of 2012 Latest forecast growth rates 2013 to 2018: Civil: 3% to 4% CAGR Military: Flat near term; Future uncertain Investor Visit Introduction to GKN 11 September

20 GKN Aerospace Engine Systems 3rd largest Tier 1 aero-engine partner OEM for the RM12 engine for Gripen aircraft EU centre of excellence - space turbines & nozzles MRO facility for gas turbines and small engines Components for aircraft engines and gas turbines Military aircraft engines Sub-systems for rocket engines Engine services Volvo Aero acquired 1 October 2012 Positions on most major new Civil Aerospace platforms Risk & Revenue Sharing Partner (RRSP) on many platforms; provides Life of Program participation Significant aftermarket content (c.30%) providing profitable long term revenue streams Integration progressing well Comme Commercial rcial LTA 24% MRO 9% Military/ Space 8% RRSP 59% Engine Systems Sales E2013 Investor Visit Introduction to GKN 11 September

21 GKN Aerospace Well positioned for the future Ship set values $m Investor Visit Introduction to GKN 11 September

22 GKN Land Systems: Attractive growth markets Agriculture Land Systems Market 4bn 39% of Sales Macro Drivers Increasing population Changing eating patterns Segment Growth %-5% (CAGR) Climate changes Construction, Mining & Utility Land Systems Market 6bn 11% of Sales Urbanisation Infrastructure Increased mass transit Segment Growth %-6% (CAGR) Industrial Land Systems Market 8bn 27% of Sales Raw material demand Globalisation Energy availability/costs Segment Growth %-5% (CAGR) * Based on 2012 sales. 23% Other (mainly automotive aftermarket and structures) Investor Visit Introduction to GKN 11 September

23 GKN Land Systems offers unique technology coverage From Power Source To Power Applied Segment Presence Ind. Ag. & CE. Ind. Ag. & CE. Ag. & CE. Ag. CE. & Ind. Ind. Ind. Ag. & CE. Ag. CE. & Ind. GKN Position #2 #2 or #3 Niche Ag. #1 Ag #2 CE #1 or #2 (Material Handling) Niche (Material Handling) Niche Ag. & CE. #1 or #2 Key Competitors Altra Renold KTR Centa Rexroth Altra KEB Dana Altra Brevini Bonfiglioli Dana Comer Bondioli Weasler Svenborg Carlisle KEB Altra Mayr Linak Oerlikon Titan Mefro Wheels India Brands Investor Visit Introduction to GKN 11 September

24 GKN Group: Growth of sales above our markets GKN Aerospace GKN Land Systems Innovation insertion in key new programs New aircraft platforms move into rate production Application of composite and light weight metallic technology Customer partnerships on key, high-growth platforms Customer demand for global suppliers Demand for efficient, reliable power management solutions Leverage GKN technology to increase content New market penetration - globalisation GKN Driveline Growth in all wheel drive increases content Innovative products for more fuel efficient vehicles Strong market share in high growth regions Increasing global/mega platforms GKN Powder Metallurgy New product application of PM technology Higher performance trends create Design for PM opportunities Unique parts and powder capability Geographic expansion into high growth regions Investor Visit Introduction to GKN 11 September

25 Drivers to progress through the margin range Trading Margin 2012 FY Targets GKN Driveline 7.3% 8-10 % GKN Powder Metallurgy 10.0% 9-11 % GKN Aerospace 11.2% % GKN Land Systems 9.4% 8-11 % Technology sustains margin progression Light weight Fuel efficiency Electrification Operational excellence provides foundation Lean and flexible cost structure Optimising supply chain Value driven pricing Group 8.1% 8-10% = in the range Investor Visit Introduction to GKN 11 September

26 Results for the six months to 30 June 2013 Good first half Sales up 12% to 3.87bn Management PBT up 5% to 278m 25m restructuring costs included in H1 EPS down 3%; Interim dividend increased by 8% A350 pic On xx 2013 the A350 successfully performed its maiden flight All divisions performing well Engine Systems (Volvo Aero) made strong contribution to GKN Aerospace GKN Driveline reported good organic sales growth GKN Powder Metallurgy delivered excellent margin GKN Land Systems maintained strong operational discipline Investor Visit Introduction to GKN 11 September

27 A balanced approach to Growth, Margin and ROIC Growth above market Increasing content per platform Strength in high growth markets Target Margin 8% to 10% Technology underpins Margin Operational excellence Business performance ROIC >20% Focussed capital allocation Profitable growth Increasing EPS, cash flow & dividends Investor Visit Introduction to GKN 11 September

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29 1 Birmingham Plant (BIR)

30 Ground Floor Orientation Plan No Smoking on site except designated areas Production Area Main Office Meeting Room 2 Meeting Room 1 Meeting Room 4 Reception Meeting Room 3 Human Resources Employee Entrance Security Fire Alarm test Mondays at 11am Main Car Park Smoking Area 2

31 GKN Group at a glance 3 3

32 GKN Executive Committee Nigel Stein Chief Executive Marcus Bryson Andrew Reynolds Smith Bill Seeger Judith Felton Doug McIldowie Chief Executive Aerospace & Land Systems Chief Executive Automotive Finance Director Company Secretary Human Resources Director 4 4

33 Delivering to our markets GKN Driveline The worlds leading supplier of automotive driveline systems and solutions, including all-wheel drive. GKN Powder Metallurgy The world s largest manufacturer of sintered components, predominantly to the automotive sector 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 5 5

34 GKN Driveline driving tomorrow s technology 6 6

35 GKN Driveline Executive Team Andrew Reynolds Smith Chief Executive Automotive & Powder Metallurgy 7

36 GKN Driveline CVJ Systems efficient thinking the technology leader in CVJ sideshafts > weight, space and fuel savings > improved efficiency > solutions provider > most extensive range of CVJs > widest global footprint > manufacturing CVJs in 21 countries 8

37 GKN Driveline AWD Systems dynamic thinking > the global leader in efficient all-wheel drive systems unique capability to develop and manufacture full AWD Systems > world-class engineering over many years > optimised components through full system understanding 9

38 GKN Driveline Trans Axle Solutions unlimited thinking a leader in conventional and controlled differentials for transmissions and axles > manufacturing in all regions of the world > full product range > established and experienced player 10

39 GKN Driveline edrive Systems electrified thinking a pioneer in advanced electric and hybrid drivelines > systems leadership capability > standard product range > 250,000 vehicles on the road > etransmissions success in each major automotive region > broader range of motors 11

40 Customer brands 12

41 GKN Driveline global footprint 13

42 GKN AWD Systems Plants Americas Europe Asia Pacific GKN Driveline Nagoya GKN Driveline Newton GKN Driveline Köping GKN Driveline Tochigi GKN DL Bowling Green GKN Driveline Bruneck GKN Driveline Shanghai 14 14

43 GKN Driveline engineering footprint 3 Research & Product Development Centres 7 Global Product Centres 10 Application Engineering centres 2 Proving Grounds 15

44 GKN Driveline European 16

45 GKN driveline Europe 17

46 GKN Driveline Birmingham organisation Plant Director BIR Adam Nock Operations VS Manager Andrew Ferber FI-CO / IT Technology Julian Fitzsimmons Functions Manufacturing Engineering Dean Trappett Human Resources Alison Eldridge Supply Chain Management Astrid Leggewie Purchasing Richard Hughes Quality Mgt Stuart Reynolds Customer Relationship Mgt Bryan Black Risk Management Peter Middleton Site Serv.Maint SEO Env t Peter Middleton 18

47 GKN Driveline Product Segments CVJ Systems AWD Systems Trans Axle Solutions edrive Systems CV Joints Propshafts Differentials eaxles Sideshafts Transfer Units AWD Couplings Limited Slip & Locking Differentials etransmissions emotors Disconnects Final Drive Units 19

48 GKN Driveline Birmingham - History Hardy, Spicer & Company was formed in in 1925 Moved to new premises on the Chester Road in the Coincided with the development in 1956 of The Birfield (CV) Joint and with the launch of the Mini which utilised the CVJ in its FWD design 1966 GKN acquires Birfield Group 1970/80 s CVJ 5.5m pa / c.2000 people 1986 NMUK commences production of the Bluebird 1992 TMUK commences production of the Carina E 1993 UK Ops formed HSP / BEX / BRD Automotive Driveline Division HQ 2004 re-named Driveline Birmingham 2005 Southworks vacated and sold 2009 Site Consolidation 20

49 GKN Driveline Birmingham - Today Established 1925 Location Erdington, Birmingham Products Sideshafts, Propshafts & Associated Components Main Customers JLR, Toyota, Nissan, Renault, Dacia, Honda, Fiat, Volvo, Bentley, Lotus, AMG Total Area 48,000 m² Quality TS16949 Certified Environment ISO14001 Certified Health & Safety OSHAS Certified 21

50 GKN Driveline Birmingham - Products Sideshafts Propshafts 22

51 Side-shafts & Components Fixed Outer Race (Bell) Driveshaft Plunging Autor Race (Short Tulip) Cage Supplied from Other GKN Co. Inner Race Barshaft Solid manufactured BIR Monobloc Tubeshaft supplied from other GKN Co. 23

52 Propshafts & Components Vehicle Flange F Rubber Coupling CVJ Joints DTF Joints Crash Features Cardan Joints 24

53 Jaguar Land Rover Programmes Propshaft & Side-Shafts Supply Locations All UK plants, currently supporting India & China Second Tier ZF on side-shafts 25 25

54 UK Transplant Customer Programmes Toyota Side-shaft Supply Locations UK, Japan, South Africa, Nissan Propshaft & Side-shafts Supply Locations UK, Russia Honda Propshaft & Side-shafts Supply Locations UK, USA 26 26

55 Other Customer Programmes Other Customer Summary: Propshaft & Side-shafts Supply Locations UK, Italy, USA, Sweden, Belgium, Romania, Russia, France, Poland 27

56 BIR Lean Evolution Faraday Value Stream Phase Value Stream Phase Value Stream Phase

57 Drives a Theme review H&S across every plant and every process to implement lessons learnt. Use of external experts and auditors to ensure best practice. Roll out of to provide guidance, training and e-tools across every manufacturing site in designated safety corners. Quarterly Safety Activity reporting RADAR (Risk Awareness Detection Action Review) Machinery Risk Personal Protective Safety Equipment Safety Devices H&S has always been and remains our top priority. 29