GEA presents 2018 results

Technology group GEA has announced its definitive figures for fiscal 2018. In addition, Stefan Klebert, GEA’s new CEO, presented his analysis of the status quo and outlined the immediate action the company will take. He also announced a Capital Markets Day for September 2019, at which he and the new CFO Marcus A. Ketter, who will join the company on May 20, will present the updated corporate strategy to sustainably strengthen profitability. Adjustments to the organizational structure are to be made public prior to that, at the end of June.

Satisfying revenue growth in 2018 and constant dividend

GEA had to contend with a good market environment in 2018, which however worsened as the year progressed. Order intake rose by 3.5 percent to EUR 4,917.7 million, but slowed down, in particular, toward the end of the year. Revenues grew by 4.9 percent to EUR 4,828.2 million, with the Homogenizers and Food Processing & Packaging product groups registering especially strong growth. Nearly all product groups and application centers posted higher revenues, with the exception of the application centers (APC) Dairy and Utilities. At EUR 518.2 million, operating EBITDA was down 8.0 percent on the previous year, yielding an operating EBITDA margin of 10.7 percent.

"APC Dairy in particular fell significantly short of results expectations. To a lesser extent, price pressure, product mix and exchange rate effects also made themselves felt in the Separation, Flow Components and Milking and Dairy Farming product groups. Over the next weeks, we will have to analyze the causes of the decline and initiate respective measures to sustainably improve the results of these core activities," commented Stefan Klebert.

The Supervisory Board and Executive Board will propose that the Annual General Meeting approve payout of an unchanged dividend of EUR 0.85 per share for the 2018 fiscal year. In doing so, GEA will go beyond its fundamental target of distributing 40 to 50 percent of group earnings, thus underscoring its unaltered belief in its operational strength.

Outlook 2019

For fiscal year 2019, GEA is expecting its revenue moderately below the previous year's level, an EBITDA before restructuring measures between EUR 450 and 490 million and a ROCE between 8.5 to 10.5 percent. The difference in the expected profit margin for 2019 between this outlook and the figures communicated in the ad-hoc disclosure on 6 February (EUR 440 to 480 million) results from the initial application of IFRS 16 (plus EUR 59 million) and the inclusion of strategic projects (minus EUR 49 million) that have not yet been taken into account.

Fundamentals of the new organizational structure

The company’s business is currently divided into two business areas: Equipment and Solutions. This is to be replaced with a divisional structure. The change is designed to enhance transparency and facilitate the management of individual businesses. A further aim is to reinforce managers’ entrepreneurial responsibility. To date, P&L responsibility has not been adequate below the Executive Board level. GEA will retain its customer-oriented bundling of activities in country organizations and will analyze its fields of enterprise with a view to potentially strengthening its attractive service business. The new structure is to be finalized and key responsibilities defined by the end of June. 

“Our employees have an entrepreneurial mindset,” said Stefan Klebert. “We have to give our managers clear responsibility for revenues and earnings again so that they can act as entrepreneurs as well.”

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