Those who know a vehicle's inner workings may know GKN's
components. GKN serves its customers through its four segments:
Aerospace, Driveline, Powder Metallurgy and Land Systems. Core
products include driveshafts, propshafts, torque management, and
chassis components for light vehicles and trucks; airframe and
engine structures for aircraft; and axles, wheels, and tractor
attachments for agricultural, construction, and other off-highway
vehicles. GKN has operations in more than 30 countries, and its
customers include most of the top vehicle and aircraft
manufacturers around the world, including Boeing, Airbus, Fiat
Chrysler, and Ford Group. In 2018, GKN was acquired by British
turnaround firm, Melrose, in a hostile takeover. Melrose paid $10.5
billion for the company and is in the process of selling
its powder metallurgy division with possible plans to offload
its off-highway powertrain unit and wheels business.
Operations
Of GKN's four business segments, Driveline and Aerospace are the
two largest at around 45% and 30% of total revenue,
respectively.
Driveline is a supplier of automotive driveline systems and
solutions and has a fairly even spread across GKN's three regions.
Aerospace supplies aerostructures, engine products and electrical
wiring systems to the global aerospace industry; its biggest
customers include Airbus and General Electric, and military
comprises 25% of sales. Powder Metallurgy produces metal powder and
then creates automotive components though its two subsidiaries,
Hoeganaes and GKN Sinter, and Land Systems supplies power
management products for the agricultural, construction and
industrial equipment.
Geographic Reach
GKN operates facilities in more than 30 countries. Europe,
including the UK, is the largest region by revenue at around half
of all sales, while the Americas sales are around 40%; the
Asia/Pacific region and Africa comprise the rest. Half of GKN's
workforce is located in Europe (including the UK), with around a
quarter each in the Americas and the Asia-Pacific
region/Africa.
Sales and Marketing
GNK counts among its biggest customers Fiat Chrysler, Airbus,
Ford ,VW Group, GM Group, Renault Nissan, United Technologies,
General Electric, Boeing, and Toyota Group. Its primary served
markets are agriculture, construction, defense, forestry, industry,
civil, military, integrated aerostructures, and engine systems.
Financial Performance
Note: Growth rates may differ after conversion to US
Dollars.
External conditions meant 2015 was a somewhat turbulent year for
GKN given how its fortunes are closely tied to its customer
markets, and while total sales of £7.2 billion represented 4%
growth on prior year, positive growth was not consistent across
operating segments. The two biggest segments, Driveline and
Aerospace (£3.5 billion and £2.5 billion in total sales,
respectively), grew by 3% and 12%, but Powder Metallurgy and Land
Systems shrank by 1% and 10% to £0.9 billion and £0.7 billion,
respectively. Powder Metallurgy suffered in China and Brazil in
particular, although this was to some extent counterbalanced by a
solid performance in Europe.
Cash flow from operating activities was flat in 2015, at £940
million
Strategy
GKN pursues four key strategic objectives, which include
strengthening capacity in Mexico, the US and China, and innovating
in technology. In the former, the company invested in composite and
metallic manufacturing in Mexico, and completed a manufacturing
site in Seattle that supports the Boeing 737 MAX assembly line. In
the latter, GKN acquired Sheets Manufacturing Inc, an engine inlet
lipskin producer.
Adverse market conditions put pressure on the Land Systems
segment, and to address falling sales management cut costs; this
incurred a re-structuring charge of £11 million.
Aerospace is undergoing a transition as some aircraft programs
are approaching end-life, while others are ramping up; 2016 sales
are expected to be flat as a result. GKN is looking to capitalise
on expected growth in vehicle production in China, North America,
Europe and India, and so Driveline and Powder Metallurgy can expect
above-market growth.
The company also values developing new technologies, for
instance it developed a new air intake in the aerospace sector that
combines ice protection and noise reduction for the first time, for
which it was shortlisted for the European Clean Sky Initiative
award. Additionally, GKN is looking to expand its presence in the
3D printing (additive manufacturing) field, and has received its
first orders for 3D printed parts, for military use. GKN's eDrive
business, which makes axles for electric vehicles, is small at
present but is expected to grow as sales of electric vehicles rise
over the coming years.
GKN is fighting off a hostile takeover from Melrose. The company
plans to sell off non-core parts of the business, including its
aerospace division, which employs 1,600 people. In a further
attempt to fend off Melrose, the company agreed to merge its auto
parts business -- GKN Driveline -- with US auto-engineer Dana
in a £4.4 billion deal. The newly formed company will be UK-listed
but US domiciled.
Mergers and Acquisitions
GKN acquired Dutch aerospace firm Fokker Technologies in October
2015, which supplies doors, flaperons, flaps and landing-gear
components, among other things, to the construction of the Lockheed
Martin F-35, the world's most expensive military aircraft. Fokker
also already has an established presence in China, and its
acquisition will ramp up GKN's presence in the regional market.
Also acquired was Sheets Manufacturing, the acquisition of which
will enable GKN to produce streamlining lipskin products on an
industrial scale.