overview and introduction - gkn group overview presentation 2016 7 gkn aerospace – world class...
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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 world’s 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 20p
25p
30p
FY2011
FY2012
FY2013
FY2014
FY2015
Dividend
8.7p 4p
7p
10p
FY2011
FY2012
FY2013
FY2014
FY2015
£0m
£500m
£1,000m
FY2011
FY2012
FY2013
FY2014
FY2015
PBT
£603m £400m
£550m
£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
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 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,
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
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
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.