GKN plc overview Farnborough Airshow 2012

Transcription

1 GKN plc overview Farnborough Airshow 2012

2 Strategic Goals Building a portfolio of market leaders with: leading market shares in chosen segments above market growth in each division margin expanding through the target ranges technology leadership engineering for the future Sales by division Sales by region 885m 1,003m 1,481m 2,795m 2,232m 2,877m 845m Total 2011 Sales 6,112m 2

3 Global Positioning 44,000 employees in over 30 countries 3

4 GKN Driveline From driveshaft to driveline repositioned globally 2011 sales by region Unrivalled capability global no 1 Asia 31% Europe 40% Americas 29% 2011 sales by customer 4

5 GKN Powder Metallurgy 2011 sales by region 0% Sinter - Rest of world 7% Hoeganaes 17% Sinter Americas 38% Sinter Europe 38% 2011 sales by customer 5

6 Land Systems 2011 sales by market Market Leading Positions 2011 sales by customer 6

7 GKN Aerospace $2.5bn international aerospace enterprise 29 sites - 9,000 people GKN Aerospace Marcus Bryson Aerospace North America Kevin Cummings Aerospace Europe Phil Swash Aerospace North America Aerospace Europe & Special Products Group 7

8 GKN Aerospace A leader in composites and lightweight aircraft structures and engine products Strong performance in 2011 Grew to 1.5bn sales Increased margin to 11.6% (before central costs) Secured orders of ~ 2.4bn Expanded customer base and platform distribution Added 3 new customers: Dassault, Triumph, Bell Further aligned portfolio (58% Civil, 42% Military) to focus on growth markets 8

9 Priorities of the business DRIVING PERFORMANCE SAFETY TECHNOLOGY DRIVING GROWTH CUSTOMERS 9

10 GKN Aerospace 10

11 GKN Aerospace Previous Key key growth Growth events Events: St Louis-2002 Secure military position Major Boeing Military relationship Pilkington Aerospace-2004 Secure Military Transparency leadership Stellex-2005 Complimentary to St. Louis Boeing Commercial position on B787 Teleflex-2007 Extend to engine hot section Secure major GE relationship Rolls-Royce Composite Fan Blade JV-2008 Positioning for Next Gen Single Aisle Strategic Partnership with RR Filton-2009 Major capability expansion and A350 position Strategic position with Airbus 11

12 GKN Aerospace Strong sales and margin delivery 12

13 GKN Aerospace World class product portfolio Airframe Subassemblies Composite Structures Metallic Structures Engine Products Nacelles Canopies and Transparencies Fuel & Flotation Systems Hondajet Fuselage Assembly A400M Composite Wing Spar F/A-22 Titanium Aft Boom Exhaust Systems Gulfstream G100/G150/ Dassault Falcon 50EX Military Canopies and Windshields Fuel Systems Airbus Fixed Trailing Edge GEnx Composite Fan Case Main Landing Gear Beam Assembly Fan Modules A330 Trent 700 Fan Cowl Door Aircraft Flotation Devices B787 Passenger Windows B787 Section 41 Floor Assembly F-135 Fan Inlet Case F-35 JSF Titanium Bulkhead Fan Blades Bombardier Dash Seals & Gaskets 13

14 Airframe and niche product portfolio Winglets Wing Leading & Trailing Edge Assemblies Integrated Floor Structures Vertical/Horizontal Tail Planes Composite Fuselage Structures Commercial & Military Commercial Military Wing Structures & Surfaces Metallic Fuselage Structures Canopies & Windows Nacelle Systems Ice Protection for Wings & Engines Fuel & Flotation Systems 14

15 Engine product portfolio Commercial & Military Commercial Military Composite & Metallic Fan Blades Blisks/IBR s Diffusers Turbine Casings Exhaust Systems HPIP Structures Composite & Metallic Fan Cases Tail Bearing Housing Composite Fan Inlet Frame Inner Core Fairings Compressor Cases Engine Ducts Compressor & Turbine Vanes & Blades 15

16 Technology Targeted innovation 16

17 GKN Aerospace Well positioned for the future A320 A330 A350 A380 A400M B787 B747-8 F15 F18 C17 Blackhawk CH53K F35 C130J V22 HTF7000 * * * Life of Programme * * * * * * Ship set values $m Significant proportion of life of programme * * 17

18 Acquisition of Volvo Aero

19 Volvo Aero acquisition transaction overview Strong financial rationale Enterprise Value SEK 6.9bn ( 633m) Consideration of 513m 140m equity placing (c.5%) and debt 6.3x expected 2012 Volvo Aero EBITDA 0.9x expected 2012 sales of 670m Expect in first full year* Accretive to management EPS Margin to meet GKN Aerospace target of 11-13% Generate ROIC above GKN s WACC of 12% Excellent strategic fit Creates a market leader No.3 in engine components Business has invested heavily to secure positions on new engine programmes Combines complementary product and technology focus Access to well-respected engineering capability Creates a balanced GKN Aerospace structures and engine products Strengthens and broadens OEM relationships. Value enhancing acquisition for GKN Note: 1 = SEK10.9 * Nothing in this presentation is intended to be a profit estimate for any period or a forecast of future profits and statements relating to earnings accretion should not be interpreted to mean that the earnings per GKN share for the current or future financial periods will necessarily match or exceed its historical published earnings per share. 19

20 Volvo Aero leading producer of aero-engine components Designs, engineers and manufactures components and sub-assemblies for aircraft engine turbines Key customers are all the major aero engine manufacturers Employs some 3,000 people, including 500 engineers Based in Sweden, Norway and USA Focus on civil aerospace Sales of c. 600m in 2011 Invested heavily to secure positions on new engine programmes 290m over last 4 years Positions on most major civil aerospace platforms will benefit as build increase Risk and revenue sharing partner (RRSP) business model, provides life-ofprogramme participation Significant aftermarket content providing profitable long-term revenue streams High-quality customer base Government, 14% Source: FY11, Management information, excludes rental income Source: FY11, Management information, excludes rental income Note: MTU represents joint programmes with PW 20

21 GKN and Volvo Aero: complementary product portfolio Volvo Aero designs and manufactures components for aircraft engine turbines. Range of components includes: Fan/compressor cases Bearing/housings Hubs Spools Fan/compressor structures Compressor rear frame/diffuser cases Combustion chamber/after burner liners Low pressure turbine cases (LPT s) Turbine structures Shafts Vanes Volvo Aero: BLACK GKN: RED 21

22 Combination of complementary technologies Volvo Aero: Lightweight metallic New technologies Optimised fabrication Weld simulation Automated laser welding Metal deposition Advanced machining and automation capabilities could be transferred to GKN US sites Additive layer technology good match to GKN s current development GKN: Composites High performance structures Composite fan blades (JV with Rolls-Royce) Composite fan cases Advanced manufacturing Advanced fibre placement Environmental technology Winglets Multifunctional technologies Electro-thermal ice protection Volvo Aero: Turbine structures Volvo Aero: Compressor rotors GKN: Composite fan frame GKN: Composite fan blades 22

23 Volvo Aero business model Circa 70% of Volvo Aero is based on RRSP model RRSP mirrors the OEM model risks and rewards are shared based on % participation Upfront costs are rewarded by strong participation in aftermarket sales Provides long-term profitability and cash flows Good timing for acquisition Significant upfront investments in new programmes already incurred Lower Margin Year 5 Year 10 Year 20 Reflects Volvo Aero contract positions High Margin Trent 500 RRSP LTA / LOP* Year 30 & more Time Time * LTA contracts are typically for up to 10 years and renewed / recomposed through product life cycle Trent 900 Junior RRSP Traditional RRSP Source: Vendor due diligence report and GKN management estimates 23

24 Attractive programme portfolio drives revenue Secure long-term revenue on civil engines 24

25 Transaction strengthens GKN Aerospace GKN Aerospace product and market mix Sales before 1.5bn Sales before OEM Relationships Sales pro forma 2.1bn Sales pro forma Other 7% Government, 4% Balanced business Increased civil Broader customer mix 2011 data. Source: GKN Aerospace 2011 results, 2011 Volvo Aero internal financial information (excludes rental income) 25

26 A leading business with high-quality revenue streams GKN Group sales GKN Group trading profit 1 Before Before Pro forma Pro forma 2011 data. Source: GKN 2011 management information, Volvo Group 2011 Annual Report 1 Trading profit excluding corporate costs and impact of Gallatin Greater aerospace contribution 26 26

27 Summary GKN Aerospace Proven track record of growth and margin progression into 11% - 13% range Strong position on existing programmes with increasing build rates New programmes now set to ramp-up production Technology development remains a focus and is positioning GKN for future programmes Filton acquisition and integration very successful and A350 capabilities now being proven Volvo Aero brings strong engine component technology and good positions on most engine programmes 27

28 Disclaimer NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA OR ANY JURISDICTION WHERE SUCH DISTRIBUTION IS UNLAWFUL. This presentation is neither an advertisement nor a prospectus and you should not subscribe for or purchase any shares on the basis of information provided in this presentation. This presentation does not constitute or form the basis of any investment decision, nor does it constitute or form, or should it be construed as, any part of any offer or invitation for the sale or purchase of, or the solicitation of any offer to acquire or subscribe for, any shares in GKN, nor shall any part of the Information be relied on in connection with any contract or investment decision relating to any securities, nor does it constitute any recommendation regarding securities of GKN. This presentation does not purport to be comprehensive and has not been independently verified. Certain statements, beliefs and opinions in this presentation are based on information provided by the target ( Volvo Aero ) or its parent company, AB Volvo. While the presentation has been prepared in good faith, no representation, warranty or undertaking, express or implied, is or will be given and no responsibility or liability is or will be accepted by GKN or any of their respective directors, officers, employees, affiliates, advisers or agents (together with GKN, the "GKN Persons") relating to the accuracy or completeness of the presentation and any such liability for any loss howsoever arising, directly or indirectly, from any use of the presentation or otherwise arising in connection with it is expressly disclaimed. Unless specified otherwise, all expressions of opinion and belief contained in the presentation are opinions held by the management of GKN. Past performance cannot be relied on as a guide to future performance. GKN do not agree or give any undertaking to provide you with access to any additional information or to update the information contained in the presentation, or to correct any inaccuracies which may become apparent. To the extent permitted by law, no liability whatsoever is accepted by any of the GKN Persons for any loss howsoever arising, directly or indirectly, from any use of this presentation or such information or opinions contained herein or otherwise arising in connection herewith. Certain statements, beliefs and opinions in this presentation are forward-looking, which reflect GKN's or, as appropriate, its directors current expectations and projections about future events. These statements may be identified by such words as may, anticipated, plans, expects, believes and similar expressions. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward-looking statements. Any forward-looking statements speak only as at the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. You should not place undue reliance on forward-looking statements. GKN does not undertake any obligation to update or revise any forward-looking statements, whether as a result of inaccuracies which may become apparent, new information, future events or otherwise. 28