Divisional performance against Group strategy
Strategic objective Progress
• Number one in driveline and AWD markets. Leading in our • £880 million annualised new business won in sideshafts and all-wheel drive chosen markets products. • Construction of state-of-the-art research and development facility in Shanghai, Leveraging plus localisation of key AWD programmes in China. a strong • Ramping up of our new AWD plant in Thailand and expanded facilities in Turkey, global presence China and the US, plus development of new facilities in Poland and Mexico.
Differentiating ourselves through technology Driving operational excellence
• AWD platform partner with Volvo on the all-new XC90, including both the conventional and plug-in hybrid variants. • Unveiled new eTwinster, which brings true torque vectoring capabilities to electric and hybrid vehicles for the first time. • Developed the new benchmark in constant velocity joint technology, the VL3, which debuted on the BMW 7 Series. • Developed the GKN Driveline Excellence System to ensure consistency in key processes and standards.
Sustaining above market growth
Organic sales increased by £173 million (5%) compared with global light vehicle production which was up 1%. The adverse effect of currency translation was £69 million (2%). Constant velocity jointed (CVJ) Systems accounted for 60% of sales and non-CVJ sales were 40%. The organic improvement in trading profit was £8 million reflecting higher volumes in Europe. Profit conversion was limited by lower profitability in Japan and Brazil. The positive impact of currency translation on trading profit was £2 million. GKN Driveline’s market outperformance was mainly in Europe reflecting recent market share gains. A stronger position in premium vehicles, demand for which continued to be positive, and GKN Driveline’s broadening product mix, particularly with AWD systems such as for the Fiat® 500X, Jeep Renegade, and Volvo XC90. GKN Driveline performed broadly in line with the market in North America (reflecting its lower content on truck-based platforms) and slightly below
the market in China (recognising its greater exposure to global brands, which performed less strongly than domestic producers, and negative pricing). The Americas operations were impacted by the Brazil market although capacity there was utilised to support growth in other plants. European plants were running at very high capacity with a strong conversion on the additional sales. In China, after the volatility in the third quarter, the business had a better end to the year. During the year, around £880 million of annualised sales in new and replacement business was secured and a number of important milestones achieved, including: • being selected by Volvo Cars to be their development partner on the front-wheel drive, AWD and hybrid drivelines of the all-new Volvo XC90 • becoming the first global tier one supplier to design, develop and
manufacture a complete AWD system in China. GKN Driveline supplies the complete AWD to SAIC Motors’ new MG GS compact SUV, as well as the front wheel-drive system • winning an Automotive News PACE award for its two-speed eAxle technology, showcased on the class-redefining BMW i8 plug-in hybrid supercar • expanding production facilities in Mexico, Turkey, Poland, Thailand and Chongqing, China and opening a state-of-the-art engineering facility at MIRA Technology Park, UK to test and develop the driveline technologies of the future • GKN Driveline Brazil being awarded Toyota’s prestigious South America Supplier Quality Excellence Award for the second year in a row.
See pages 6 and 7 for more information on our strategic framework
GKN plc Annual Report and Accounts 2015