FTSE 100 Conference for Private Client Fund Managers

Transcription

1 FTSE 100 Conference for Private Client Fund Managers Wednesday 10 July 2013 Guy Stainer, Director Investor Relations

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 2

3 Financial overview 2012* Sales Profit before tax ROIC 6,904m 2011: 6,112m 497m 2011: 417m 18.1% 2011: 18.3% Earnings per share Total dividend Net debt 26.5p 2011: 22.6p 7.2p 2011: 6.0p 871m 2011: 538m *Numbers presented on a management basis 3

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: Proforma GKN 2012 sales 4

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 5

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. 6

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 7

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 8

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

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 10

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 11

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. 12

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 13

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 14

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 15

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) 16

17 GKN Aerospace - markets and customers Market Business Mix Sector Customer base 17

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 18

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 19

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 E

21 GKN Aerospace Well positioned for the future Ship set values $m 21

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) 22

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 23

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 24

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 25

26 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 Profitability growth Increasing EPS, cash flow & dividends 26

27 Questions