GKN Powder Metallurgy Powder to parts Peter Oberparleiter CEO, GKN Powder Metallurgy
Disclaimer Cautionary statement This presentation contains forward looking statements which are made in good faith based on the information available to 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. 2
Powder Metallurgy Technology without boundaries Improved endurance and thermal Conductivity Extreme tolerances Ability to produce features previously requiring secondary processes Net shape forming capabilities Use of lightweight materials Capability to design-in weight reduction features Reduced part complexity utilizing less components 95% material utilization Recycled Raw Materials Less energy consumption with reduced processes 3
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 4
GKN Powder Metallurgy Global presence GKN Powder Metallurgy 2012 874m sales c.6,600 employees 34 locations 14 countries 20% 26% 49% HC 19% Europe 1% 15% Sweden North America United States Canada England Germany France Spain Italy Romania China Premium Japan India Sinter China 10% 13% 46% South America Brazil Argentina South Africa 4% Manufacturing Plant Sinter India Manufacturing Plant HC Corporate Office / Engineering Centre Hoeganaes Sinter Market shares Source: GKN estimates 5
Leading market positions in powder and parts Powder market Market dynamics Sinter market Höganäs JFE GKN Hoeganaes 22% QMP Kobelco PM growth outperforms markets Market concentration ongoing financially strong global technology players preferred Mega-platforms are growing opportunity for global players GKN Sinter Metals 18% Hitachi Metaldyne Sumitomo Fine Sinter Top 3 Powder companies cover 70% of the market Top 8 Sinter companies cover 60% of the market 6
Customer base and growing geographic spread Sinter Metals sales by customer PM sales by region Ford GM ZF Fiat Chrysler Volkswagen Hilite Non Automotive Linamar 62% Bosch Other 9% 6% 5% 4% 3% 4% 3% 2% Hoeganaes 17% Sinter Asia and South America 12% Sinter Europe 35% Sinter North America 36% Top 20 customers cover c.60% of sales 25% non-automotive customers Good progress to develop balanced sales in the regions Asia Pacific and South America a solid position but still work to do 7
Footprint in high growth markets Million Vehicles 70 60 50 40 30 20 10 Brasil Russia India China Mexico Growing presence and capability in the key emerging markets 0 2013 2018 Brazil Today # 2 Plan for Expansion in 2014 India Today # 1 Extending Capacity New Greenfield plant under review China Today # 7 2018 # 2 Expansion of existing facility New plant opening Q4/2013 Develop powder capability Mexico and Russia under review 8
Operational excellence Quality Every day we. Ship 17m parts to c.3,000 customers Continue to drive Zero Defect Strategy Value streams Every day we. Manufacture 17m parts in 34 plants Increase share of fully sustained value streams 60 50 40 30 20 10 0 2007 2008 2009 2010 2011 2012 Continuous improvement Cover inflation Margin progress Cost leadership 100% 75% 50% 25% 0% 2007 2008 2009 2010 2011 2012 ppm implemented planned 9
Awards and special recognitions in 2012 TATA Quality Award GM Supplier Award 2012 Schaeffler Supplier of the Year Award 2012 Tecumseh Supplier Award 2012 Safety Award (by professional associat. of wood and metal) 50 Million Synchronizer Hubs in 2012 10
Industry growth trends driving new PM applications Industry drivers Climate protection Energy efficiency Renewable energy Environmental legislation Technology trends Highly efficient powertrains Electrification Light weight Alternative propulsion PM applications Differential gears VVT (Variable Valve Timing) Electric Power Steering (EPS) systems Transmission gears Hydrogen storage Softmagnetic parts Alu Camshaft caps New E-Motors with SMC 11
Strong Alignment with Market Technology Trends 50 45 VVT CAGR 2013-2018 9.6% Vehicle Technology Adoption [million] 40 35 30 25 20 15 10 5 0 2012 2013 2014 2015 2016 2017 2018 Start-stop EPS systems 7+ speed transmissions 19.9% 8.4% 22.8% Four product groups represented c.15% of 2012 turnover 12 Source: IHS + autobeats.com 2012
Unmatched engineering capability from Powder to Parts More than 400 engineers worldwide More than 500 patents globally Increasing spend in engineering from 3% of sales to 4% 50 customer TechDays Fotos TechDays 13
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. 14
Design for PM Capturing the value with unique capability Unique materials Advanced processes Technically enhanced powders (TEP) Advanced forming and furnace technology 15
Design for PM Creating new opportunities One-way clutch Unique joining / Creative design Differential gears Advanced processes/ Extreme forming Soft magnetic components Creative designs/ Advanced processes Hydrogen purification Unique material porosity 2018 2006 Highly complex shapes Aluminium cam caps Unique material / light weight Sensor fixtures Extreme forming/ Advanced processes E-Motors with SMC Creative designs/ Advanced processes Creative design / Advanced processes Including Additive layer 16
Design for PM New product launches Electric powered steering helical pulleys Differentiators: Extreme forming Net shape More durable and best surface accuracy Netshape transmission gear 34 helical Differentiators: Net shape Multi part substitution Reduced noise and vibration 17
GKN Powder Metallurgy market outperformance LV Market Global LV market growth m vehicles 83 104 PM market growth driven by new technology trends m PM Market 4.3 5.6 2013 2018 GKN Powder Metallurgy outperformance c.3% above LV market 2013 2018 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 18
GKN Powder Metallurgy summary Growth c.3% above LV market Targeting new markets Focus on growth product groups Expand global footprint Margin range 9% to 11% ROIC >20% Design for PM Selective business wins Operational continuous improvement Business performance Maximize asset utilization Balanced investment Strong cashflow 19