The Board of GKN Group plc has announced that Anne Stevens, currently Interim Chief Executive, has agreed to become the Group’s new Chief Executive with immediate effect. It was added that since her appointment, Stevens has taken leadership of an ongoing and wide-ranging internal review of all GKN’s businesses which has culminated in the development of a transformation plan to improve GKN’s performance.
“The Board believes that Anne Stevens has the track record to transform GKN. After a successful turnaround of The Ford Motor Company’s businesses in Mexico, Canada and South America, she was appointed as Chief Operating Officer for the Americas where she developed the transformation plan for Ford’s US business,” stated GKN Chairman, Mike Turner.
“Subsequently, Anne became Chairman, CEO and President of Carpenter Technology. She was a non-executive director of Lockheed Martin from 2002 until she stepped down at the end of 2017 to take up her executive role at GKN. Her operational and strategic skills are ideally suited to GKN and the Board is very impressed with the contribution she has made so far in setting out plans for a significant improvement in the Group’s performance.”
Commenting on the announcement, Stevens added, “GKN is a world leader with the potential to perform even better. We have been working extensively over the past few months to develop detailed cash and profit improvement plans. I am relishing the challenge of delivering that potential with a new Group-wide improvement programme underway. GKN has a great executive team leading a dedicated and focused workforce with strong market positions and outstanding technologies. I am committed to, and I am confident that we can, deliver more for our shareholders while improving what we do for our customers and supporting our employees.”
GKN was reported to have commenced a wide-ranging review in 2017, said to be necessary because while sales have been growing, both profit margins and cash generation have been below expectations.
GKN is now creating differentiated product segments that will be classified as either core or non-core. There will be three different strategies for the core product segments – improve (eg Constant Velocity Joints), grow (eg Aero Engines) and develop (eg eDrive and Additive Manufacturing). Each strategy will have different capital expenditure targets and different expectations for growth, margin improvement, cash generation and return on investment. However, all will have stretching targets to be achieved through a transformation programme known as ‘Project Boost’.
Project Boost is said to be a two year programme to improve cash and profit that will incorporate all areas of the business operating system including culture. This includes optimising direct and indirect procurement, process and productivity, and capital allocation.
Portfolio rationalisation of its non-core product segments is also reported to be a priority.
The Board stated that it has regularly reviewed GKN’s corporate structure and in recent months GKN has undertaken an intensive analysis of the economic benefits and costs (including the costs of pensions and tax) of separating the Aerospace and Automotive businesses.
In addition to Project Boost, the Board added that it believes that shareholder value will be maximised by setting distinct strategic, operational and financial objectives for the businesses, with clear focus, accountability and better aligned incentive plans.
It was announced that the Board intends to separate the businesses, recognising the strategic optionality for shareholders in having separate companies with distinct investment profiles and capital allocation policies. Further details on the optimal method of separation will be published in due course, with the timing of the separation to be determined by the need to maximise the economic benefits and minimise the costs associated with separation.