GKN: Driving Growth: Delivering Results Nigel Stein Finance Director & CEO Automotive
GKN s Automotive and Powder Metallurgy Businesses TotalGroup sales 3.8bn 2006 Sales by Business Other Automotive OffHighway 334m 212m Aerospace 695m Powder Met 582m Driveline 2,019m Sales of 2.8bn Trading profits of 182m 30,000 employees More than 60 operations in 30+ countries 608m 2 DRIVING GROWTH DELIVERING RESULTS
GKN in Germany At the heart of GKN s automotive businesses Country with largest number of plants and automotive employees Technology leaders in Driveshafts Sinter Metals Many Torque products 3 DRIVING GROWTH DELIVERING RESULTS
GKN s Automotive Businesses - Driveline 2006 Sales 2.0bn 1.6bn 220m 160m 20m Driveshafts Torque IDS (Aftermarket) DUJ (Double Universal Joints) Driveshafts JVs Transferred to OffHighway Arthur Connelly Graeme Walford 4 DRIVING GROWTH DELIVERING RESULTS
GKN s Automotive Businesses - Driveline 2006 Sales 2.0bn 1.6bn 220m 160m 20m Driveshafts Torque IDS (Aftermarket) DUJ (Double Universal Joints) Driveshafts JVs 1.5bn 500m 2004 Classification Sideshafts Torque, IDS, DUJ and Propshafts 5 DRIVING GROWTH DELIVERING RESULTS
Driveline - IDS Sales of c 160m Supplier of aftermarket products to passenger car and truck markets, largely in Europe Including aftermarket driveshafts and propshafts Also sells specialty products eg ATV, marine, train and industrial driveshaft applications Re-manufacturing capability Good growth and profitability through focused strategy 6 DRIVING GROWTH DELIVERING RESULTS
GKN s Powder Metallurgy 2006 Sales 582m 506m 76m ( external)* Sinter Metals Hoeganaes Around 50% of Hoeganaes sales are internal to Sinter and therefore excluded on consolidation Andy Reynolds Smith 7 DRIVING GROWTH DELIVERING RESULTS
GKN s Automotive Businesses Other Automotive 2006 Sales 212m??m 87m??m 32m Subs Autostructures Cylinder Liners UK UK & US Closing (UK Closing) 34m 1m 58m JVs Chassis Systems JV (50%) Cylinder Liners China* Emitec JV (50%) * 60% GKN owned so accounted for as subsidiary 8 DRIVING GROWTH DELIVERING RESULTS
Other automotive businesses Autostructures (Inc. Chassis Systems JV) Cylinder liners (Inc. China - 60% owned JV) Regional niche business Supplies chassis and structural components Largely UK customer base Ford, Land Rover, Toyota Part is JV with Dana Steady performer but with limited growth opportunities UK business closing in 2007 Leaves small China based business ( now c 10m sales) and US machining Supplies truck market in US and China Growth opportunities but from a small base 9 DRIVING GROWTH DELIVERING RESULTS
Emitec leader in metallic substrates Joint venture between GKN and Siemens Ceramic Metallic Performance Back pressure Thermal conductivity Thermal resistance Packaging Durability?? Weight Overall cost / performance Cost effectiveness depends on engine, combustion and after treatment needs 10 DRIVING GROWTH DELIVERING RESULTS
The substrate is part of the emissions management system OEM Engine Raw Emissions OEM selects supplier at each stage Engine-Mgmt Canner Coater Substrate Electronics, Injection Exhaust System Chemistry Thermodynamics Raw Emissions Noise, Power Catalyst Efficiency Efficiency, Power Main Players: Main Players: Main Players: Arvin Meritor Johnson Matthey Ceramic numerous Englehart - Corning (USA) Degussa - NGK (Jpn) Metallic - Emitec - NSC 11 DRIVING GROWTH DELIVERING RESULTS
A growing market 391 480 537 358 459 487 2004 2007 2010 301 399 476 2004 2007 2010 2004 2007 2010 In Mio EURO 1420 1600 60 82 100 1110 2004 2007 2010 Approximately 1.25bn Euro today and growing, split 75/25 ceramic / metallic 2004 2007 2010 12 DRIVING GROWTH DELIVERING RESULTS
Emitec today a global business Sales & Engineering Manufacturing Gothenburg Moscow Detroit Lohmar Eisenach Seoul Tokyo Fountain Inn Vietnam Bejing Osaka Taipeh Puna In all major markets where aftertreatment demand is growing 13 DRIVING GROWTH DELIVERING RESULTS
Driven by legislation eg Heavy Duty Trucks 14 DRIVING GROWTH DELIVERING RESULTS
Sector development 2004-2010 Total Market 2004 Pass.Car, LKW <3,5t; 1055 1.110 55 Truck > 3,5t 22 24 6 3 +9,3% p.a Total Market 2007 Pass.Car, LKW<3,5t; 1184 46 1.420 238 Truck > 3,5t 238 179 8 5 + 4,2% p.a Total Market 2010 Pass. Car, LKW<3,5t 1.234 84 2/3 Wheeler Pass.Car, Truck<3,5t Truck > 3,5t Utility 1.600 366 Truck > 3,5t 366 267 9 Non Automotive 6 15 DRIVING GROWTH DELIVERING RESULTS
250 Emitec s turnaround delivered and new growth phase begins Mn Euro 200 150 Growth 100 50 0 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 16 DRIVING GROWTH DELIVERING RESULTS
Significant growth in Truck and heavy duty diesel 100% Sales mix 2007-2011 Truck and heavy duty diesel 90% 80% 70% 60% 50% PassCar Gasoline PassCar Diesel Truck Retrofit Diesel 2-Wheeler 40% 30% 20% 10 % 0% 2007 2011 17 DRIVING GROWTH DELIVERING RESULTS
Global Automotive Market As the world s population continues to expand And income levels rise in the developing world Demand for cars continues to grow 18 DRIVING GROWTH DELIVERING RESULTS
Global Light Vehicle Growth 2002 to 2011 90 80 Production Volume (m) 70 60 50 Compound Annual Growth Rate 2006-2011 + 11.87m 40 Vehicles 3.3% 30 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 19 DRIVING GROWTH DELIVERING RESULTS Total Vehicles Source: Based on Global Insight January 2007 Vehicle Forecast
Cars are becoming ever more sophisticated Even if smaller and lighter Or based on Hybrid and other new technology Nissan March Chery Tiggo 6 Lexus RX400H 20 DRIVING GROWTH DELIVERING RESULTS
GKN now active in wider driveline market Total market driveline components 16.8bn CVJ market 3.5bn - GKN share around 40% GKN s presence Live axles 35% CVJ Driveshafts 21% Market leader Growing presence Propshafts 7% Not a target Transfer cases 12% PTUs 5% Final Drive 15% TMDs 5% Source: DRI, GKN Driveline estimates 21 DRIVING GROWTH DELIVERING RESULTS
GKN is a technology leader- both in Driveshafts the new idea for ball plunge joints...... combined sets of angled and straight tracks 22 DRIVING GROWTH DELIVERING RESULTS
Engineering Innovation & New Products in Torque GKN innovates and rapidly develops bespoke technology products to satisfy customer requirements in driveline and powertrain recent examples: Electronic Differential Lock Other examples of areas of recent new product development: Couplings & TMDs Electro-hydraulic TMD actuation E-Motor driven axles Gear development Electronic Torque Vectoring Planetary Gear Oil Pump (with GKN Sinter Metals) Face Gear Differential 23 DRIVING GROWTH DELIVERING RESULTS
And GKN is well placed to benefit from geographic trends Growth Static Static Growth Static Growth Growth Growth 24 DRIVING GROWTH DELIVERING RESULTS
Sales to US manufacturers GKN Group Sales 2006 Automotive - Row US auto Sales on GM, Ford and Chrysler NA vehicles Non auto Non Auto Automotive US Auto Sales 25 DRIVING GROWTH DELIVERING RESULTS
In summary GKN s automotive businesses are well positioned for growth Leading technology Excellent global footprint Strong customer relationships An experienced team - committed to winning! 26 DRIVING GROWTH DELIVERING RESULTS
GKN: Driving Growth: Delivering Results