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GKN Land Systems
Power source to power applied
Gerard Lavery | CEO Land Systems
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.
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
GKN Land Systems
Supporting customers in meeting the demands of a crowded planet
Our product technology delivers the power to harvest crops, move earth, mine
resources, handle materials and capture natural energy
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
What we do
Help leading global original equipment manufacturers by offering
efficiency, reliability and safety
Design, manufacture, market and service powertrain products and
systems to transmit and control power
Enable agricultural, construction/mining
and industrial customers’ machinery
propel, position and perform
GKN Land Systems
Power source to power applied
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Operating in attractive growth markets
Land Systems
Market
£4bn
Agriculture
39% of Sales
Macro Drivers
Increasing population
Changing eating patterns
Segment Growth
2013-18
3%-5%
(CAGR)
Climate changes
Land Systems
Market
£6bn
Construction,
Mining & Utility
11% of Sales
Urbanisation
Infrastructure
Segment Growth
2013-18
4%-6%
(CAGR)
Increased mass transit
Raw material demand
Land Systems
Market
£8bn
Industrial
27% of Sales
Globalisation
Energy availability/costs
* Based on 2012 sales. 23% Other (mainly automotive aftermarket and structures)
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Segment Growth
2013-18
3%-5%
(CAGR)
Building a strong customer base
Products, systems, services and support for vehicle and machinery OEMs
and aftermarket customers
Agriculture
Construction
Mining & Utility
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Industrial
A tier one supplier to global leaders
10,000 +
customers
37% of sales with nine customers
9%
John Deere
7%
Case New Holland
Chassis Systems
5%
Caterpillar
63%
2012
£933m
4%
Claas
4%
Agco
3%
1%
2%
2%
VW Group
JCB
Carraro
Other
An opportunity to win greater content on every vehicle / machine
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Fragmented competitive environment
From Power
Source
Segment
Presence
GKN Position
Key
Competitors
To Power
Applied
Ind.
Ag. &
CE.
Ind.
Ag. &
CE.
Ag. &
CE.
#2
#2 or #3
Niche
Ag.
Altra
Renold
KTR
Centa
Rexroth
Altra
KEB
Dana
Altra
Brevini
Bonfiglioli
Ag.
CE. &
Ind.
#1 Ag
#2 CE
Dana
Comer
Bondioli
Weasler
Ind.
Ind.
Ag. &
CE.
Ag.
CE. &
Ind.
#1 or #2
(Material
Handling)
Niche
(Material
Handling)
Niche
Ag. & CE.
#1 or #2
Svenborg
Carlisle
KEB
Altra
Mayr
Linak
Oerlikon
Titan
Mefro
Wheels
India
Brands
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Executing our strategy
Driving
growth
Lead in
chosen
markets
Stronger customer relationships
Knowledge partner
Entrepreneurial sales approach
Leverage
global
footprint
Strengthen in faster growth economies
Americas and Asia Pacific key targets
Aligned, localised production
Technology
driving
margin
Enhanced engineering capability
Gears, hybrid drive & controls
Solutions capability
Delivering
innovation
Operational
excellence
Global operations organisation
Local pricing strategy
Continuous improvement and Lean culture
Safety,
quality,
service,
productivity
Sustain above
market growth
Added content per vehicle / machine
Expanding global footprint
Delivering
shareholder
value
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
“One face to
customers”
Broader
global
footprint
Driving growth: One face to customers
Divisional Executive
Operations
Product
Management
Sales &
Business
Development
Integrated sales organisation and product
management
Couplings
EU Shafts
Shafts
Marketing
EU Motion
Gears
Sales (Regional)
EU Wheels
Clutches
Global Accounts
Americas
Ind. Brakes
IS&S
Asia
Controls
Services
W&S
Factory P&L
Product offering
Customer focused
Content – secure maximum £ value on
each OE vehicle and machine
Services transformation – increased value
added labour services
Focus on delivering safety, productivity and
operational excellence
Customer focused organisation
driving growth
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Agriculture vehicle content: Recent business secured
Wheels entry on Tractor platform
Order £4m+
− Key win = £3m
Due to: Pro-active support, responsiveness and flexibility
Powertrain solution for self-propelled Forage Harvester
platform
− Additional win = £1m+
(Gearbox, driveshaft and Stromag clutches)
Platform = £47m opportunity
(10 x business won)
TAS
Clutches
ICVD
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Driveshaft
Construction vehicle content: Recent business secured
Building on an established relationship allowed working
on multiple product groups:
− Loaders
− Excavators
-
Order £7m
Won 8,000 Wheels = 100% supply on platform
ICVD units
Driveshafts
Won 2,000 Wheels = 100% supply on platform
ICVD units
Driveshafts
− Due to:
− Established working relationship
− Brand and product knowledge
− Technology day
Platform = £60m opportunity
Flexible
Coupling
(9 x business won)
DUJ
Driveshaft
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Chassis
Industrial machinery content: Business opportunities
Order £2m
Mobile Cranes
− Key win = £2m
Due to : technology, collaboration and flexibility
Stromag offers exciting new opportunities
in Material Handling
Platform = £62m opportunity
Flexible
Coupling
Gearbox
Driveshaft
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Wheels
Better balanced global footprint
Key Drivers
Global Revenue Mix
Trebling China business
− Leveraging assets by
localising driveshaft
production in Liuzhou,
China
74%
23%
3%
60%
30%
10%
− GKN HuaDing JV,
Northern China addresses
Ag. equipment opportunity
Pushing Stromag
portfolio in Americas
Building key strategic
sourcing agreements
2012
2018
Key :
Manufacturing/Service/Sales
Sales Offices
Agents/Distributors
BRIC countries dominate growth over the next 5 years
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Technology: Delivering innovation
Product & systems roadmap
Technology
“Improve vehicle and machinery effectiveness to
increase customer productivity and yield”
Basic technology
Low horse power
Low speed
Safety not a priority
Solid technology
High power
Higher speed
Safety
Emerging countries
Complex technology
High safety standards
High efficiency/
reliability
Higher comfort
Integrated systems
Technology solutions
Electrification
Data communication
Driverless vehicles
Productivity
Regulations
Developed countries
Customised solutions
− 180 focused engineers
Developing competence in gear solutions, electric/hybrid and controls
Strengthening engineering resources and commercial focus to drive innovation
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Delivering innovative solutions
Double clutch & synchroniser
Opportunity: Dual
clutch and
synchronizer for
industrial 8-speed
transmission
−
New design for
a new market
−
High demand
for small
envelope &
light weight
First use: Cummins
engine in production
ePower generator for agriculture
Opportunity: Generator
mounted front/rear
solution for electric
implements
Commercialising
Hybrid drive system for mass transit
Opportunity: Integrated package including
electric motor, gearbox and system integration
In field
test
Best technology in our chosen market: The “go to” solution provider for customers
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Driving operational excellence
Strategy deployment
This is about:
Continuously delivering productivity
by relentlessly reducing costs
Production
Excellence
Business
Process
Excellence
Creating a world class safety culture
The linkage from strategy to the
execution
People Excellence
Excellence in everything we do
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Financial discipline
Building a solid business
Growth drivers 2013-2018
Aggregate market growth 3%-5% CAGR
− 2013 markets flat to down
Headwinds
− Autostructures program wind down
− Lower growth in European markets
− Mining near-term
Actions
− Exploit Stromag product portfolio breadth
Significant performance improvement
− Proactive restructuring & flexibility
− Increase content per vehicle/machine
− Accelerate Asia and Americas
− Stromag acquisition margin enhancing
− Operational excellence driving productivity
Expect to outperform markets
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
GKN Land Systems summary
Organic growth
above market
Content per vehicle/machine
Globalisation
Technology
ROIC
>20%
Margin range
8%-11%
Operational excellence
Integrated supply chain
More resilient to market
fluctuations
Strong financial discipline
Business
performance
Strong cashflow
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GKN CAPITAL MARKETS DAY – 21 MAY 2013
Value creation