GKN Overview and introduction 23 February 2016
A Tier 1 Supplier to the major OE manufacturers in Automotive, Aerospace and Land Systems markets Global engineering group Sales of 7.69 billion in 2015 56,000 people in more than 30 countries GKN Aerospace A leading first tier supplier to the global aerospace industry. 2015 - Sales by division Land Systems (9%) 693m Other (0%) 42m GKN Driveline The world leading supplier of automotive driveline systems and solutions. Aerospace (33%) 2,500m Driveline (46%) 3,548m GKN Powder Metallurgy One of the world s largest manufacturers of metal powder and sintered components. Powder Metallurgy (12%) 906m GKN Land Systems A leading supplier of engineered power management products, systems and services. All group financial data in this document relates to 2015 unless otherwise stated. Figures are presented on a management basis. 2
Our strategy Four strong divisions Five strategic objectives Creating long-term shareholder value Lead in chosen markets Leverage global footprint Growth target: Above market Growth Technology driving margin Operational excellence Margin Group target: 8-10% BUSINESS PERFORMANCE ROIC Target: 20% Cash Flow Sustain above market growth Increasing cash flow, EPS and dividends 3
Key financial metrics Sales 7,689m 8,000m 6,500m 5,000m 2011 2012 2013 2014 2015 700m PBT 550m 603m 400m 2011 2012 2013 2014 2015 11% 9% 8% 6% Margin ROIC 18% 8.8% 17.8% 16% 2011 2012 2013 2014 2015 20% 2011 2012 2013 2014 2015 30p EPS 25p 27.8p 20p 2011 2012 2013 2014 2015 10p Dividend 7p 8.7p 4p 2011 2012 2013 2014 2015 Free Cash Flow 370m 400m 200m 0m 2011 2012 2013 2014 2015 Net Debt 769m 1,000m 500m 0m 2011 2012 2013 2014 2015 Figures are presented on a management basis. 4
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 GKN Aerospace Sales by Customer 2015 Others 22% Airbus 20% GKN Aerospace (excluding Fokker) Sales by product 2015 143m (6%) Special products GKN Aerospace Sales by market 2015 25% Military Lockheed 3% Rolls-Royce 4% UTC 13% Spirit 4% Honeywell 4% Snecma 6% Boeing 11% GE 13% 1,128m (47%) Aerostructures 1,116m (47%) Engine components and sub-systems 75% Commercial 5
GKN Aerospace Fokker Technologies 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 Revenue by end-market Revenue by customer Sales by sub-division Services 25% 25% Commercial Dassault 3% Airbus A350 Bombardier 5% Other 8% 22% Gulfstream Landing Gear 5% SABCA 9% Military 30% 20% Business Jets NHI 12% 16% Airbus 17% 17% Lockheed Boeing Services 21% Electrical 20% Aerostructures 45% 6
GKN Aerospace world class product portfolio AEROSTRUCTURES ENGINE SYSTEMS SPECIAL PRODUCTS LANDING GEAR WIRING INTER- CONNECT SYSTEMS GLOBAL SERVICES 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) Electrical Wiring Interconnection Systems (EWIS) for aircraft & aircraft engines Availability Services, MRO, Conversion and Completion for Mature and Legacy aircraft GLOBAL NO. 2 GLOBAL NO. 2 GLOBAL NO. 1 GLOBAL NO. 8 GLOBAL NO. 3 GLOBAL BRAND 7
Revenue per Aircraft GKN Aerospace portfolio Declining Stable Growing $6-9 million A380 $3-6 million A330 F/A-18 B787 A350 JSF A320 CH53-K $0-3 million Commercial Black Hawk A400M C130J G650 B737MAX HTF7000 B777X Military 8
GKN Aerospace - summary Key growth drivers Airbus A380 Commercial (75% of sales) Strong position on existing programmes with increasing build rates from 2016/2017 New programmes ramping up production Boeing 787, A350 Boeing 737 MAX 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 A350 9
GKN Driveline at a glance 26,300 employees 46 manufacturing locations 23 countries Sales: 3.55bn GKN Driveline Sales by region 2015 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. GKN Driveline Sales by product 2015 Source: IHS Automotive, February 2016 GKN Driveline Sales by customer 2015 Rest of World 27% Europe 36% AWD & edrive Systems 40% Mitubishi Group, 3% Other, 21% Fiat Chrysler, 14% VW Group, 13% Tata, 5% Americas 37% CVJ Systems 60% BMW, 5% Toyota Group, 7% Renault- Nissan, 10% Ford Group, 11% GM Group, 11% 10
GKN Driveline - a complete driveline solution Leadership in all major product lines 11
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% 12
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 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. Global PM Market Share GKN Powder Metallurgy Sales by region 2015 GKN Powder Metallurgy Sales by customer 2015 Others 38% GKN PM 18% Sumitomo 9% Sinter Rest of world 8% Hoeganaes 16% Sinter Americas 43% Ford 9% GM 7% Hilite 5% Fiat Chrysler 4% Hitachi PM 6% Other 59% Schaeffler 4% Linamar 3% ZF Group 3% Stackpole 2% Ames 2% Schunk 3% Metaldyne 4% PMG 4% Miba 5% Porite 4% Fine Sinter 5% Sinter Europe 33% >80% of sales to Automotive Sector Borg Warner 2% VW Group 2% Bosch 2% 13
GKN Powder Metallurgy - Automotive trends driving Design for PM Reduced Emissions Energy efficiency Renewable energy EPS (ELECTRIC POWER STEERING) ALUMINIUM CARRIER 7+ SPEED TRANSMISSIONS VVT (CAM PHASING) TRANSMISSION GEARS START/STOP VARIABLE VANE PUMPS Lightweight Fuel efficiency Electrification 14
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 15
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 inservice support. GKN Land Systems Sales by Region 2015 GKN Land Systems Sales by market 2015 GKN Land Systems Sales by customer 2015 Americas 20% Rest of World 4% Structures 9% Construction & Mining 12% Agriculture 45% John Deere 9% Case New Holland 7% Tata 6% Caterpillar 4% Automotive 10% Other 62% Claas 4% Agco 3% JCB 2% VW 1% Europe 76% Industrial 24% Toyota Group 1% Agri-Italia/Carraro 1% 16
GKN Land Systems integrated Powertrain components Clutches PTO shafts Gearboxes 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 17
GKN Land Systems - summary 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 18
GKN summary Well positioned to deliver sustainable growth Delivering shareholder value through a balance of: Growth in excess of the markets Growth Improving margins Return on invested capital Increasing cashflow and dividends Additional growth through strategic, bolt-on acquisitions - adding capability, market position and global footprint Margin Financial Metrics Cash Flow ROIC 19
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. 20