5.driveline final

GKN Driveline Business overview and strategy Steve Markevich | CEO GKN Driveline

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GKN CAPITAL MARKETS DAY – 21 MAY 2013

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 Driveline – An excellent global footprint

GKN Driveline

end-2012

£3.24 billion

Sales

c.22,000

Employees

45 Plants

22 Countries

Brazil

India

U.K.

France

Spain

Italy

Slovenia

Turkey

Malaysia

Thailand

Colombia Singapore

Taiwan

Japan

United

States China

South

Korea

Australia

Mexico

Manufacturing plant

Joint Venture

Corporate office /

Engineering centre

Sweden

Poland

Germany

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Clear and compelling strategy

Integrated Getrag AWD into Driveline

Technology roadmap aligned to market needs

Global customers with strategic relationships

Selective wins with pricing discipline

Prioritised investments

Integrated global network

− people, process, systems, standards, etc.

GKN Driveline performing as the market leader

Creating distinct competitive advantage

Delivering on a commitment

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Sales growth above market

0

20

40

60

80

100

120

140

160

180

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2007 2008 2009 2010 2011 2012

Global light vehicle production index

(2007 = 100)

Drive

line

sa

les £

m

Organic growth of c.5% above market driven by:

− Leading positions and share gains in growth markets

− Global customer mix and premium brands

− Increasing share and content of AWD

Acquisition of Getrag

Driveline in Q4, 2011

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Unrivalled driveline product and systems capability

Market leader in CVJ sideshafts and AWD systems

Future hybrid and electric drivetrains

61% of

Sales

39% of

Sales

CVJ Systems All-Wheel Drive

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Leading positions in our core product segments

Source: GKN estimated rankings on 2013 basis; excludes in-house.

Propshafts

GKN

Dana

IFA Rotorion

American Axle

JTEKT

CVJ Sideshafts

GKN

NTN

Nexteer

Hyundai WIA

Wanxiang/Neapco

AWD Couplings

JTEKT

BorgWarner

GKN

Honda

Magna (inc. WIA JV)

Performance Diffs

GKN

Eaton

American Axle

Dana

JTEKT

*Emerging product segment

Electric Axle*

GKN

Magna

American Axle

BorgWarner

Linamar

AWD PTU/FDU

GKN

Magna

Dymos

Hyundai Wia

American Axle

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Balanced global footprint with excellent regional balance

668 815

1115

2010 2011 2012

919 1105 1196

2010 2011 2012

846 875 925

2010 2011 2012

Europe

• Customer mix

• Export demand

• AWD acquisition

Americas

• NA market strength

• CVJ share gain

• AWD acquisition

• Brazil slowed by

vehicle imports

Asia

• Strong growth in China

• Japan weaker

Sales by region of origin 2012 Sales growth by region

£m

£m

£m

Europe 37%

Americas 34%

Asia 29%

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Operational excellence on a global scale

19 14

10 7 6 5

2007 2008 2009 2010 2011 2012

Defect parts per million (ppm)

Mexico

China

Simplifying global supply chains

Relentless focus on waste reduction

World class quality disciplines

Global best practices

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Expanding capability for high growth markets

CVJ – Key

investments

Sweden AWD capacity

expansion

Thailand Sideshaft capacity

expansion.

India Ramp-up new Pune plant

and expand Oragadam.

Mexico Sideshaft capacity

expansion and new forge

United States Propshaft capacity

expansion. New 4WD

FDU supply.

Poland Sideshaft capacity

expansion.

China Sideshaft capacity

expansion.

Russia Under review.

Italy AWD and eDrive

capacity expansion

AWD – Investment

supports global

growth

China Extension of SDS JV

to AWD and eDrive

products

Add propshafts and 4WD FDUs

Add propshafts

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GKN Driveline sales (China with SDS at JV share)

Full driveline capability in China

8 manufacturing plants

3,800 people

OEM plant locations

GKN/SDS locations

SDS JV now includes AWD and eDrive Systems

GKN Torque Shanghai now part of SDS

Participating in rapidly growing SUV and AWD market

Expanding local engineering capability

209 232

297

2010 2011 2012

£m

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Sales by customer 2012

Footprint aligned with customer needs

Value of global reach and scale

Common platforms with optimised designs

Strategic relationships with early involvement

Global account management and program

launch capability

Well positioned with global customers and platforms

VW Group, 15%

Renault-Nissan, 11%

GM, 10%

Ford, 10% FIAT Chrysler,

10% Toyota, 6%

BMW, 4%

Mitsubishi, 5%

JLR-TATA, 5%

Volvo Car - Geely, 4%

Others, 20%

Mega-platforms an opportunity to accelerate global growth

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The leading component, solutions and systems supplier

2015

Components

Selective growth (BRIC) and disciplined with

market opportunities

Global customer and manufacturing footprint

Solutions

Systems

Greater deployment of advanced

technology products

Fuel-efficient, light-weight,

high performance

Strategic development partner

Next generation AWD systems

and electric drivetrains

2020

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Market leadership in CVJ systems

GKN 41%

NTN

Nexteer

Kofco

Wia

Wanxiang/ Neapco

In-house

Other

Global shares 2012

GKN positioning in key growth regions

Selective wins, controlled growth

Reducing fixed cost structure

Optimising LCC sourcing strategy

Recovering material costs / inflation

Driving operational excellence

Favourable capacity / competitor dynamic

Strong margin management actions

N. America China India Brazil

GKN Driveline

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Technology leadership in CVJ systems

Progressing with roll-out of new light-weight, fuel-efficient CVJ technology

GKN Driveline VL3

− Lighter (up to 3.8kg per car set)

− Packaging space reduction (9%)

− Higher power transfer and efficiency

RW

D v

eh

icle

s

FW

D v

eh

icle

s

GKN Driveline SX8

− Lighter and smaller package space

− 1% fuel saving / CO2 reduction

− 50° for premium applications

3 MILLION/YEAR

GROWING TO 8 MILLION

IN 2018

TARGET TO LAUNCH IN

2015

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The making of the global leader in AWD Systems

1990 …. 2000 2010

1985

Commercialisation of the

viscous coupling begins –

becomes a global industry

standard for AWD in 1990s

2004

GKN acquires Tochigi Fuji Sangyo

2006

GKN establishes Torque Shanghai

2011

GKN acquires Getrag Driveline Products

Major milestones

2013

GKN’s SDS JV expanded

to include AWD

2011

Launch of 1st

electric axle

2013

Will launch 1st AWD

disconnect system

http://getrag.de/

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Globally balanced sales and customer profile in AWD

Americas Europe Asia

£384m £423m

£453m

Based on 2012 sales

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Vehicle driveline content increasing

Front-Wheel-Drive (FWD)

Rear-Wheel-Drive (RWD) with independent suspension

Front sideshafts

Rear

Propshaft

Rear Final

Drive Unit

Rear

sideshafts *

* Limited slip

differentials

(LSD) sometimes

fitted in Rear

FDU

Directional

Value Index

100 500

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Vehicle driveline content increasing

All-Wheel-Drive (AWD)

Four-Wheel-Drive (4WD) with independent suspension

Front Axle Front sideshafts

Front

Propshaft

Rear

Propshaft

Transfer Case (incl. Coupling or TMD)

Rear Final

Drive Unit

Rear sideshafts

Power Transfer

Unit

Propshaft

Rear Final

Drive Unit

Front sideshafts

Rear sideshafts

Coupling

*

Option fitment

of Limited Slip

Differential

(LSD) or

Locker

*

*

Directional

Value Index

900 1200

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Growing demand for AWD

Consumers like AWD

− Safety, assured driving, performance and image

OEMs like AWD

− Improves vehicle performance and image

− Sellable feature with content and margin

Both want acceptable fuel economy and CO2

Front-wheel

drive

Traditional

All-wheel

drive

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Technology roadmap addresses legislative challenges

The challenge of tougher legislation for emissions and fuel efficiency

Optimised AWD Disconnect AWD Hybrid/electric AWD Today’s AWD

EU Legislation 130gCO2/km 95gCO2/km 75gCO2/km

GKN Driveline’s technology response

< 1.5% 4% to 5% 20% - 40% Fuel / CO2 Improvement

GKN can influence market technology uptake – systems capability important

2015 2020 2025

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Positioned to continue outperforming the market

Global LV market growth

Mega-platforms and

AWD growth and content

GKN Driveline target growth c.2% ahead of market

Unrivalled global

positioning

Technology leadership /

increasing AWD content Globally competitive

− Geographic footprint

− Broad customer base

− Strength in growth markets

− Response to tighter legislation

− Customer co-developments

− Fuel-efficient products

− Increasingly lean and agile cost

structure

AWD systems content Mega-platforms

GKN Driveline All-Wheel Drive Systems Lars Christiansson | MD GKN Driveline Köping & Bruneck

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Köping and Newton plants integrated from October 2011

Worked together early to adopt best practices

Cultural fit with focus on safety and excellence

Expanded product and development capability

Well-received by customers – business continuing to grow

High employee satisfaction

Joining GKN Driveline’s AWD business

Highlights – personal observations

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Technology leadership in AWD

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Technology leadership in AWD

Three key technologies for GKN Driveline

AWD Disconnect systems

Electric axle & hybrid AWD

Full AWD systems integration

Link to video

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AWD Disconnect – The best of both worlds

Traditional AWD is less fuel efficient

than 2WD

− Additional weight

− Drag, friction and churn losses

AWD Disconnect

− Eliminates many of the losses

− Improved fuel efficiency

Seamless connect and disconnect

3 customer launches in 2013/14

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Mainstream AWD disconnect application

Targets broad market for

SUVs and Crossovers

Challenging technology development

with major fuel efficiency benefits

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Premium AWD disconnect application

With a twin-clutch, TWINSTER® rear-drive

module for enhanced vehicle dynamic

Unique GKN capability

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AWD hybrid with electric axle

Full AWD performance

GKN patented disconnect system

(e-Axle in-use only when needed)

Hybrid functionality

Electric-only driving (short range)

40% fuel efficiency improvement

7 customer programmes launched or

under development

Source: PSA

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New product launch – 2-speed electric axle

Launching 2014

Performance & efficiency

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Unique full AWD systems capability

Design, manufacture and sourcing of

components

Complete development, test

and validation capability

Vehicle dynamics tuning,

software & electronic controls

Customer co-developments

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Summary

Technology leadership is aligned with market trends for fuel efficiency

and low CO2

AWD disconnect systems launching this year

Growing customer interest in hybrid AWD with electric axle

Unique AWD system capability – GKN has the product and the

technology

Important and successful acquisition of Getrag Driveline gives GKN a

market leading AWD footprint

GKN Driveline Conclusion Andy Reynolds Smith | CEO, GKN Automotive

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Strategic outsourcing policy

Prioritised investment

Disciplined capital allocation

Selective business wins

Disciplined pricing behaviour

Operational excellence

Lean cost structure

AWD volumes with higher

content

Excellent position in growth

markets

Global footprint serving mega-

platforms

Strong cashflow

GKN Driveline summary

ROIC

>20%

Growth c.2%

above market

Margin range

8% to 10%

Business

performance

5.driveline final

Documents

gkn capital markets

driveline sales

sales growth

sales cvj systems

unrivalled driveline

global customers

global sc

driveline technology