Divisional performance against Group strategy
Our acquisition of Fokker supports GKN Aerospace’s performance against all our strategic objectives. For more details, see the Fokker case study on pages 20 and 21.
• Global number two in aerostructures and in the independent aero engine Leading in our structures market, and number three in electrical wiring systems. chosen markets • $3.5 billion new work packages won. • Invested in composite and metallic manufacturing in Mexico. Leveraging • Construction completed of a new manufacturing site in Seattle, US, to support the Boeing 737 MAX assembly line. a strong global presence • Construction began of a new, state-of-the-art and fully automated facility in Orangeburg, US, to deliver engine inlet lip skins for the Boeing 737 MAX.
Differentiating ourselves through technology Driving operational excellence
• Fabricated robotically welded case technology selected for the Pratt & Whitney PurePower PW1900 Geared Turbofan™ engine. • Continued to develop strong positions in additive manufacturing and future wing design. • Acquired Sheets Manufacturing Inc. in the US, which provided unique spin forming capability for the development and production of engine inlet lip skins. • Improved customer scorecard results across the globe through ‘Voice of the Customer’ initiative. • Received a number of quality awards from customers, including ‘Best performing supplier’ from Airbus.
Sustaining above market growth
Trading profit was £273 million (2014: £277 million). There was a favourable currency translation impact of £16 million, the organic reduction in trading profit was £1 million and the reduction in profit from acquisitions was £19 million, including £18 million in relation to Fokker. As highlighted at the half year, GKN Aerospace made further progress on an onerous contract, which resulted in a full year benefit of £22 million, and warranty claims were resolved favourably resulting in a credit of £8 million; partly offset by £5 million of restructuring charges. Organic commercial aerospace sales were 6% higher, benefiting from stronger orders for the A350, business jets, Boeing 737 and Boeing 787 partly offset by a reduction in A330 production. Military organic sales were 9% lower, primarily due to the ending of the C-17 programme and lower sales for F/A-18 Super Hornet and UH-60 Black Hawk helicopter. Overall, organic profits in GKN Aerospace held steady year on year. Progress was made on the A350, with units delivered late in the
See pages 6 and 7 for more information on our strategic framework
year moving into profit, as planned. Early production of the work that was won following the Sheets acquisition was encouraging. Profits were negatively impacted by the reduction in mature commercial and military programmes. The integration of Fokker, acquired on 28 October 2015, is proceeding well. It added sales of £113 million. The losses of £18 million included £13 million of deal and integration costs and £5 million of restructuring costs, planned prior to the acquisition by GKN Aerospace. These are separate to the €50 million (£35 million) of restructuring costs which were announced at the time of the acquisition and are expected to be charged in 2016, although excluded from management profits. During the year, new work packages won exceeded $3.5 billion over their contract lives and a number of important milestones were achieved, including: • the acquisition of Sheets Manufacturing Inc. on 8 June 2015, a technology leader in the manufacture of aircraft engine