GKN Plc Business Report FY ended Dec. 2015

Financial Overview

(in million GBP)
FY ended Dec. 31, 2015 FY ended Dec. 31, 2014 Rate of change (%) Factors
Sales 7,231 6,982 3.6 1)
Operating profit 323 289 11.8 -
Sales by Division
-GKN Driveline 3,548 3,444 3.0 2)
-GKN Powder Metallurgy 906 916 (1.1) 3)

1) Sales
-The Company’s sales in the fiscal year ended December 31, 2015 increased by 3.6% over the previous year to GBP 7,231 million. Increases in sales from acquisitions and organic growth in the Company's Driveline and Aerospace divisions were partially offset by negative effects from currency translation and decreased sales in GKN Land Systems.

2) GKN Driveline sales
-Sales in the Company’s Driveline division for the fiscal year ended December 31, 2015 was GBP 3,548 million, a 3.0% increase over the previous year. Increased market share gains in Europe along with general sales gains in North America were partially offset by sales decreases caused by negative currency translation effects.

3) GKN Powder Metallurgy sales
-In the fiscal year ended December 31, 2015, GKN Powder Metallurgy’s sales decreased by 1.1% to GBP 906 million. While organic sales in the division increased due to growth in North America, China, and Europe, these gains were offset by a weaker Brazilian market and negative currency translation effects.

Joint Ventures

-The Company announced that its GKN Powder Metallurgy division has agreed to form a joint venture with Hongsheng Industrial Company Ltd., located in Bazhou City, Hebei Province, China. The joint venture will produce ferrous powders and is expected to become a world class powder metal manufacturer. (From a press release on July 23, 2015)

-Shanghai GKN HUAYU Driveline Systems Co., Ltd. (SDS), a Chinese joint venture between the Company and HUAYU Automotive, is investing USD 850 million over the next five years to meet growing demand for the joint venture's driveline systems, all-wheel drive (AWD) and hybrid technologies. Construction of a new 22,000-square-meter technical center in Shanghai for the joint venture is expected to complete in December 2015. The facility will provide research and development capability for complete driveline systems, including vehicle integration, software development and vehicle testing capabilities. The company's production capacity will also be substantially increased in plants across Shanghai, Chongqing, Wuhan, Changchun and Yizheng, with a new assembly plant planned in Chengdu. The Company’s GKN Powder Metallurgy division will also expand its production capacity with a new plant in Danyang, due to open later this year. (From a press release on April 19, 2015)


-The Company announced that it held an opening ceremony for its new regional headquarters for the Americas in Auburn Hills, Michigan, U.S. In addition to serving as the regional headquarters for GKN Driveline and GKN Sinter Metals, the new site also houses employees from GKN’s Land Systems division and North American Services groups. The 168,000-square-foot facility is located on an 11.2-acre site. The new headquarters, which houses 350 employees with capacity for more, provides state-of-the-art testing and validation equipment, along with additional engineering design areas for driveline and sinter metal products. The new facility provides the Company with 20% more space for engineering and testing activities. (From a press release on June 25, 2015)

Recent Developments

-The Company’s subsidiary in Japan, GKN Driveline Japan Ltd., will expand its annual production volume of rear differential locks to 1.1 million units by 2017, a 90% increase from 2014 production levels. Earlier this year, the Company started supplying its fifth-generation rear differential locks for Toyota’s IMV (Innovative International Multipurpose Vehicle) models sold in emerging markets. This is the first time the Company has provided differential locks to Toyota. The Company also supplies differential locks for the Nissan Navara pickup and various Ford models. GKN Driveline Japan is looking to supply its products to more models. (From an article in the Nikkan Jidosha Shimbun on November 10, 2015)


-The Company has supplied rear differential locks for Toyota’s IMV platform, the Nissan Navara pickup, and various Ford models. (From an article in the Nikkan Jidosha Shimbun on November 10, 2015)

-The Company has developed a new version of its Twinster torque vectoring all-wheel drive (AWD) system for the Ford Focus RS. The Ford Focus RS uses a Company AWD system with a Power Transfer Unit (PTU) and a Rear Drive Module (RDM) utilizing the Twinster twin clutch system. The Company’s Twinster technology can apply torque to one or both wheels independently, enabling dynamic torque vectoring functions across a vehicle’s entire speed range. (From a press release on September 15, 2015)

-The Company has developed a new eAxle system that makes it simpler to build plug-in hybrid models on global vehicle platforms. The technology is launching on the all-new Volvo XC90 T8 Twin Engine plug-in hybrid SUV. The Company has also worked with Volvo Cars as a development partner on the front-wheel drive and all-wheel drive drivelines of the Volvo XC90. (From a press release on September 14, 2015)

-The Company’s GKN Driveline division has worked with Volvo Cars as a development partner on the front-wheel drive and all-wheel drive (AWD) drivelines of the all-new Volvo XC90. The innovations inside the XC90's all-new AWD driveline include a new VLX ball plunging joint for rear sideshafts that reduces weight and packaging space. The vehicle also uses the Company's new Countertrack SX8 fixed joint and VL propshafts. In addition to the sideshaft and propshaft technology, the Company also supplies the power transfer unit (PTU) and the rear driveline module, which when used together transform the base front-wheel drive vehicle into an all-wheel drive model. (From a press release on June 11, 2015)

-The Company has become the first global tier one supplier to design, develop and manufacture a complete all-wheel drive (AWD) system in China. The company supplies the complete AWD system to SAIC Motors' new MG GS compact SUV, as well as the front wheel-drive system. The on-demand AWD system was developed and fully integrated into the MG GS by Shanghai GKN HUAYU Driveline systems, a joint venture between the Company and HUAYU Automotive. The MG GS platform sources the complete driveline, from transmission to wheel, from the Company. Front and rear sideshafts, propshafts, power transfer units and rear drive modules are all manufactured locally, while the system's electromagnetic control device and hypoid gears are sourced from Japan. (From a press release on April 23, 2015)

-GKN Driveline announced that it has become the first tier one supplier ever to deliver a complete all-wheel drive (AWD) system for a vehicle manufacturer. The Company designed, developed and now manufactures the intelligent all-wheel drive systems for a new AWD global platform launched by FCA US LLC (FCA). The platform is the basis for the Fiat 500X and the Jeep Renegade. The FCA platform sources the complete driveline, from transmission to wheel, from the Company, including AWD, AWD Disconnect and front-wheel drive variants. (From a press release on April 14, 2015)

-The Company announced that Porsche AG has awarded it "Technology Partner" status for its development of a high-performance eAxle for the 918 Spyder, a plug-in hybrid supercar. The module has maximum power of 95 kW and can deliver up to 1,500 Nm of torque to the front wheels via a fixed gear ratio. A specially developed compact differential engages the torque seamlessly, giving the 918 Spyder optimum power distribution at all times. The differential also disengages the module to minimize drag losses and maximize efficiency. At speeds above 265 km/h (164mph), a clutch isolates the electric motor to prevent it from over-spinning. (From a press release on February 11, 2015)


-The Company’s subsidiary, GKN Driveline Brazil, has been awarded Toyota's South America Supplier Quality Excellence Award for the second year in a row. GKN Driveline Brazil has been supplying components to Toyota in South America since 2000 and currently supplies sideshafts for the Toyota Etios in Brazil and the Toyota Hilux in Argentina. (From a press release on May 20, 2015)

-The Company won a 2015 Automotive News PACE Award for its two-speed gearbox for electric vehicle applications from its GKN Driveline division. (From news releases issued by multiple sources on April 20, 2015)

R&D Expenditures

-In the fiscal year ended December 31, 2015, the Company invested GBP 157 million on research and development activities not qualifying for capitalization, net of customer and government funding. The Company’s Aerospace division invested the most in research and development.

R&D Facilities

-GKN Driveline, a division of the Company, opened a new engineering facility at MIRA Technology Park in Warwickshire, UK, to test and develop driveline technologies of the future. The GKN Driveline Vehicle Engineering Centre offers comprehensive facilities for the installation of prototypes, instrumentation and subsequent road and track evaluation of test cars. The 2,000-square-feet facility will support customers' current and future model development, as well as the development of the Company's own driveline and torque technologies. (From a press release on April 28, 2015)

-GKN Driveline has various research and development facilities throughout the world, including:

  • Complete vehicle proving ground in Tochigi, Japan
  • Testing facilities in Lohmar, Germany; Tochigi, Japan; Bruneck, Italy; and Auburn Hills, Michigan, U.S.

-GKN Powder Metallurgy has a central research and development center in Radevormwald, Germany. The center is supported by two regional facilities in the U.S., in Auburn Hills, Michigan, and Cinnaminson, New Jersey.

R&D Activities

-The Company’s GKN Driveline division announced that it has developed new electric drive technologies as part of its role in the Concept_e project, a GBP 16 million government-backed initiative to develop new hybrid and electric powertrain systems. The two-year collaborative research and development project has designed and developed three research technology demonstrators to showcase next-generation technology for a mild hybrid electric vehicle (MHEV), a plug-in hybrid (PHEV) and a full battery electric vehicle (BEV). The technologies were unveiled by Jaguar Land Rover and the project partners at the LCV2015 low carbon vehicle show. The Company has designed, developed and integrated two eAxles into the BEV powertrain, including a single speed and a two-speed transmission. Both eAxles build on existing eDrive technology already in series production on leading hybrid electric vehicles. (From a press release on September 9, 2015)

-The Company’s Driveline division demonstrated a range of new hybrid all-wheel drive (AWD), AWD Disconnect and torque vectoring technologies at the Company's Wintertest proving ground in Arjeplog, Sweden. A plug-in hybrid with a Company eAxle can improve fuel economy by 30-50% while boosting performance. The Company has already supported a number of ground breaking and commercially successful eAWD programs, including the Mitsubishi Outlander, Porsche 918 Spyder and BMW i8. (From a press release on March 10, 2015)

Product Development

Constant velocity joints
-The Company’s Driveline division has developed a new family of lightweight constant velocity joint (CVJ) systems that enable rear-wheel drive platforms to save more than 4 kg of weight. The new VL3 CVJ increases torque capacity by up to 27% with no increase in packaging size. Available in four sizes, the VL3-33ISM variant now has a torque capacity of 3300 Nm in a package previously capable of delivering only 2600 Nm. The VL3 CVJ system can also maintain performance while reducing package size by approximately 7%. Overall, the sideshaft system reduces weight by up to 4.2 kg per vehicle set. The VL3 joint has entered series production and will be in new vehicles starting 2016. (From a press release on November 9, 2015)

Capital Expenditure

(in million GBP)
FY ended Dec. 31, 2015 FY ended Dec. 31, 2014 FY ended Dec. 31, 2013
Total 411 403 349

Investments outside UK

-The Company’s GKN Driveline division has marked a significant expansion of its Newton facility in Catawba County, North Carolina, U.S. with a ribbon-cutting ceremony. The expansion follows a USD 100 million investment in GKN Driveline Newton, creating approximately a 25% increase in manufacturing floor space to accommodate anticipated increases in geared driveline technology production. GKN Driveline Newton specializes in producing all-wheel drive (AWD) driveline technology, including final drive units, power transfer units and clutches. (From a press release on August 28, 2015)

-The Company’s Driveline division announced the first phase of a significant expansion of its Poland operations with the construction of a new production facility. EUR 16.5 million will be invested in the project’s first phase. Up to 400 new jobs will be created in a phased plan over the next four years. The new 14,280-square-meter production facility is expected to be complete by April 2016. It will supply major car manufacturers in Europe and Russia, including Volkswagen, Porsche, Audi, Volvo, Jaguar Land Rover, Mercedes and FCA. Upon completion of the first phase, the plant will be able to produce over one million propshafts a year. The facility is being constructed adjacent to the Company's existing plant in Olesnica, South West Poland, which produces constant velocity joints (CVJ). The expansion will also increase the Company’s CVJ production capacity in Poland to over 10 million units a year. (From a press release on July 29, 2015)

-The Company’s GKN Driveline division announced that it has officially opened its new AWD manufacturing facility in Thailand. The GKN Driveline Rayong AWD facility will manufacture key AWD driveline technology, including front and rear final drive units and electronic differential locking systems for transaxle systems. The facility will supply global OEMs including Toyota, Nissan and Mitsubishi. The 4,800-square-meter facility is located on the Hemaraj Eastern Seaboard Industrial Estate, close to GKN Driveline's existing facility in Thailand, which produces driveshafts and constant velocity joints. (From a press release on July 16, 2015)

-The Company’s GKN Driveline division announced that it has expanded production capacity at its Eskisehir plant in Turkey to meet growing demand from automakers in the country. A new manufacturing facility at the GKN Driveline Eskisehir plant will more than double the plant's total size to 6,300 square meters, and increase annual driveshaft production capacity to 1.8 million units. As part of the EUR 4.5 million investment program, GKN Driveline Eskisehir has added an assembly line and expanded warehousing facilities. Located on a 9.5-acre site, the plant currently employs 130 people, and plans to increase that by 70 over the next five years. GKN Driveline Eskisehir supplies a number of major global car manufacturers in Turkey, including Ford, Renault, Honda, Fiat and Toyota. (From a press release on May 29, 2015)

-The Company announced that it has nearly tripled its manufacturing capacity at its Chongqing plant to support the expansion plans of its car manufacturer customer base. GKN Driveshaft Chongqing (GDC), a joint venture between Shanghai GKN HUAYU Driveline Systems Co., Ltd. (SDS) and China Changan Automobile Group, has expanded the plant by 129,000 square feet as part of the USD 48 million (RMB 300 million) investment. The project brings the total size of the plant to 258,000 square feet and will enable it to produce an additional 1.5 million sideshafts a year, bringing overall annual capacity to 2.1 million sideshafts. GDC currently employs 310 people, with plans to expand to over 400 by 2017. The expansion also facilitates the localization of constant velocity joint (CVJ) production for a number of car manufacturers in Chongqing, with SDS moving CVJ production from Shanghai to Chongqing for Changan Ford following the completion of the project. (From a press release on March 23, 2015)