GKN Aerospace Update for Investors

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Beverly Lynch
9 years ago
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1 GKN Aerospace Update for Investors Farnborough Air Show July 2014

2 GKN PLC: Delivering to our markets A global engineering group Sales of 7.6 billion in ,000 people in more than 30 countries Founded in Sales and Trading Profit by division GKN Aerospace A leading first tier supplier to the global aviation industry focussing on aerostructures, engine systems and specialty products. GKN Driveline A world leading supplier of automotive driveline systems and solutions, including all-wheel drive. Land Systems 12% Aerospace 30% Sales Powder Metallurgy 12% Driveline 45% Land Systems 11% Aerospace 39% Trading Profit Driveline 36% Powder Metallurgy 14% GKN Powder Metallurgy The world s largest manufacturer of sintered components, predominantly to the automotive sector. GKN Land Systems A leading supplier of technologydifferentiated power management solutions and services to the agricultural, construction, industrial and mining sectors. 2

3 GKN Aerospace $3.5 billion Global Aerospace company, 35 sites in 9 countries, 11,700 people. 3

4 GKN Aerospace World class product portfolio Aerostructures 45% of Sales 2013 Global #3 Engine structures Global #2 50% of Sales 2013 Special products 5% of Sales 2013 Global #1/2 Wing Fuselage Nacelle and Pylon Engine Systems and Services Engine structures Engine rotatives Transparencies and Protection Systems J-UCAS Fuselage A380 Fixed Trailing Edge B747-8 Exhaust B787 Anti-icing System A350XWB Rear Spar CH53K Aft Fuselage A400M Engine Intake V22 Fuel Tanks A330 Flap Skins B787 Floor Grid B787 Inner Core Cowl Full Engine MRO and support B787 Cabin Windows B767 Winglet HondaJet Fuselage Ariane 5 Exhaust nozzle F35 Canopy 4

$bn A broad customer base Aerostructures Airbus Commercial Airbus Military GKN Aerospace Sales Growth 2003-2013 Boeing

5 $bn A broad customer base Aerostructures Airbus Commercial Airbus Military GKN Aerospace Sales Growth Boeing Commercial % 2.7% 4.4% 4.4% 18.2% GE 14.3% UTC P&W (8.1%) 13.5% 20.2% Airbus Sik (5.4%) Boeing 8.2% 4.0% 1.0% 2.1% 0.6% 0.6% 3.2% Boeing Military Spirit Lockheed Martin Northrop Grumman Gromman Bell Helicopter Engine UTC Systems GE Snecma Rolls Royce MTU Honeywell Other Military 27% Civil 73% 5

6 Market Update: Combined Airbus and Boeing deliveries for 2013 reached 1,274 aircraft, up from 1,189 in Airbus and Boeing forecast deliveries of between 29,000 and 35,000 new single aisle and wide-body aircraft by 2032 c40% for replacements, c60% for fleet growth Large commercial aircraft backlog is at a new high (>10,000 aircraft - >$1.1 trillion), as is the firm engine order book - current build rate production is covered for over 8 years. This sustained order growth has led both Airbus and Boeing to increase production levels for single aisle and wide bodied aircraft. Worldwide defence spending remains subject to budget cuts 6

7 Civil Market Dynamics Continuing Positive Trend A320neo/B737MAX Launch A320/B737 Rate Increases A350/B787 Production Ramp-up A330/B777 high rates, B777X launch MRJ/C-Series/MS21 Market Entry A380/B747 Stable/declining 7

8 Military Market F-35 JSF Rate Readiness Phase C130J Reducing/Sustaining A400M Atlas In ramp-up phase F18 Super Hornet Declining CH53K In development Blackhawk Reducing/ Sustaining 8

9 GKN Aerospace well positioned for the future B737 / A320 HTF7000 A350 B787 A330 A380 Blackhawk A400M C130J JSF CH53-K F/A Ship set values $m 9

10 Targeted Innovation Technology Future Wing Technologies Advanced Fuselage Nacelle and Pylon Engine Statics Engine Rotatives Transparencies & Coatings Protection Systems Composite Technology Metallic Technology Supporting Technology 10

11 Significant technology achievements in past 12 months Supported A350 first flight & ultimate test Supported GTF certification Launched 4 Additive Manufacture Technology Centres Increased investment in technology Opened GKN Engineering Office in Bangalore Expanded US technology activities (composites & metallics) Secured key business wins (e.g 737 MAX winglet) Lead in chosen markets Leverage global footprint Technology driving margin Operational excellence Sustain above market growth 11

12 Product & Technology Strategy Near Term Mid/Long Term Strategic Products Differentiated Manufacturing Processes Material Know-How Airframe structures Engine structures Automated composite processes Rapid Machining & ECM Fabrication & Joining Additive Manufacture High temperature materials Powder materials Coatings & Surface technologies 1. Deliver Existing Commitments Secure maturity of current development programmes 2. Technology insertion campaign Improvement on existing products & securing position on under represented platforms 3. Secure position on strategic platforms Mature emerging technologies for use on new development & platform upgrade programmes 4. Develop long term product positioning Prepare for step change products & technologies 12

13 Metal AM Metallic AM Landscape & GKN Priorities DEPOSITION POWDER BED PLASMA EB LASER LASER LASER EB BINDER (WIRE) (WIRE) (WIRE) (POWDER) (POWDER) (POWDER) (POWDER) DESIGNATED ICON P EB L L L EB B PICTURE DESCRIPTION Free deposition of wire fused using plasma arc to produce part Deposition of wire fused using electron or laser beam in a chamber to produce part Deposition of powder fused using laser in a chamber to produce part Laser or electron beam selectively fuses powder on a bed in a chamber to produce part Powder / binder system requiring down-stream consolidation APPLICATIONS High material fusion rate and deposition technique enable large scale near-net shape parts or grow-outs Accurate but nearnet parts and claddings High geometric complexity enables next generation small prismatic components. Net-shape parts achievable at automotive rates 13

14 Synergy with GKN Powder Metallurgy Hoeganaes Powder production 240,000 tons of powder per year Sinter Metals Component manufacture 6 billion parts per year many applications Diverse customer base 80% automotive/ 20% industrial Global # 2 22% global share Global # 1 18% global share 3,000 customers globally 14

15 Key drivers to medium term margin progression Volvo integration A350XWB exit development phase, ramp-up B787 production ramp-up F35 production ramp-up Technology insertion in new platforms Cost base management Lean deployment throughout value chain Military budgets - C130J, F18 Customer price pressure 15

16 GKN Aerospace summary Growth above market Good position on existing and new commercial programmes Well placed on growing military platforms Margin range 11% to 13% GKN technologies bringing customer value Low cost manufacturing footprint Lean deployment throughout value chain Business performance ROIC >20% Strong Engine Systems postacquisition performance Capital allocation Effective make or buy Strong cashflow 16

17 Summary

18 GKN Aerospace - Summary GKN Aerospace has grown to a $3.5 billion global Aerospace company, with 35 sites in 9 countries, employing 11,700 people. GKN Aerospace are market leaders in airframe structures, engine components and transparencies GKN Aerospace is continuing to grow its investment in leading edge technologies, bringing their Customers high technology solutions through effective deployment of innovative solutions GKN Aerospace is continuing to develop its global manufacturing presence, with a growing low-cost footprint a key part of the drive towards increased cost competitiveness 18

19 Questions

Additive Manufacturing. Vukile Dumani 14 July 2014

Additive Manufacturing. Vukile Dumani 14 July 2014 Additive Manufacturing Vukile Dumani 14 July 2014 GKN PLC: Delivering to our Markets We have four operating divisions: GKN Driveline and GKN Powder Metallurgy that focus on the automotive market; GKN Aerospace,