GEA presentation at JP Morgan Conference at JP Morgan... · GEA presentation at JP Morgan...

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GEA presentation at JP Morgan Conference June 14 th 2018 GEA GROUP CFO, DR HELMUT SCHMALE

Transcript of GEA presentation at JP Morgan Conference at JP Morgan... · GEA presentation at JP Morgan...

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GEA presentation at JP Morgan Conference

June 14th 2018

GEA GROUP CFO, DR HELMUT SCHMALE

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Disclaimer

GEA at JP Morgan Conference June 2018

This presentation contains forward-looking statements. Forward-looking statements may include, in

particular, statements about future events, future financial performance, plans, strategies,

expectations, prospects, competitive environment, regulation and supply and demand. Statements

with respect to the future are characterized by the use of words such as "expect", "intend", "plan",

"anticipate", "believe", "estimate" and similar terms. Forward-looking statements are based on our

current assumptions and forecasts. These statements naturally entail risks and uncertainties, which

may cause the actual results of operations, financial position or performance to diverge materially

from the estimates given here. Factors that could cause such a divergence include, inter alia,

changes in the economic and business environment, fluctuations in exchange rates and interest

rates, launches of competing products, poor acceptance of new products or services, and changes in

business strategy. Given these uncertainties, readers should not put undue reliance on any forward-

looking statements. We undertake no obligation to update or revise any forward-looking statements.

Due to rounding, the sum of percentages may vary from 100%.

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Mega trends support GEA business

GEA at JP Morgan Conference June 2018

URBANIZATION WITH

GROWING MIDDLE CLASS

Growing demand for processed

food and medication

GEA offers

components and process

technology for processed food,

ready meals, fortified lifestyle

beverages and food,

medications

GREATER FOOD SAFETY

AND QUALITY

Readiness of industry to invest

more for greater process

reliability

GEA offers

certified hygienic/aseptic

processes and components to

meet the strict standards of the

industry

ENERGY SCARCITY AND

STRICTER ENVIRONMENTAL

REGULATIONS

Greater interest in efficient and

resource-saving production

processes

GEA offers

intelligent engineering processes

for resource-friendly

technologies, energy-saving

machines and processes,

as well as heat recovery

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Chemical

In OneGEA, Application Centers (APCs) engineer solutions to meet specific local customer needs

GEA at JP Morgan Conference June 2018

Technologies &

Components

Application

Engineering

Sales & Service

Support

BA Solutions

Beverage FoodDairy Pharma Utilities

BA Equipment

Customer

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… seeks to switch from

conventional to

automated milking on its farm

… the state-of-the-art GEA

DairyProQ rotary parlor

with 28-80 milking stations

Equipment new machines business

Customer … Our GEA answer is…

… plans to introduce insulin to the market

… GEA supplies various

separators for separation

of various substances

throughout the production

process

… wants to reduce the energyconsumption of its juice line &

improve product viscosity

… the most powerful GEA

homogenizer on earth

saving 7% energy

GEA at JP Morgan Conference June 2018

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… seeks a more efficient solution

to process aloe vera for use in

personal care, nutraceuticals and

food

… GEA spray drying solution for high-quality

powder

Solutions projects business

… plans a greenfield plant

for instant coffee

… GEA complete line solution for instant coffee

… wants to diversify product

portfolio with high-value add

product of bacterial culture

… GEA solution for a number

of complete lines

Customer … Our GEA answer is…

GEA at JP Morgan Conference June 2018

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… increase uptime or yield of a plant

… GEA service team supports with the right solution

Service business of Equipment & Solutions

… has an urgent problem with one of the

milk lines in Chile and needs immediate support

… GEA 24/7 local support

offered by experienced service

engineers in more than 200

service branches

… seeks de-bottle-necking of an older

plant in order to increase output by 10%

… GEA upgrades &

optimizes customers’ plants

Customer … Our GEA answer is…

GEA at JP Morgan Conference June 2018

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Comprehensive application & technology portfolio

Note: SEP = Separation, MDF = Milking Dairy Farming, HOM = Homogenizer, FLC = Flow Components, FPP = Food Processing & Packaging, COM = Compression, PES = Pasta & Extruded Snacks, DRY = Drying, LIP = Liquid Processing, SEPP = Separation Process, RFG = Refrigeration

BEVERAGES

CHEMICAL

DAIRY FARMING

DAIRY PROCESSING

FOOD

PHARMA

OTHERS

MAIN PRODUCT GROUPS & TECHNOLOGIESSEP MDF HOM FLC FPP COM PES DRY LIP SEPP RFG

APPLICATIONS

GEA at JP Morgan Conference June 2018

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Stability due to application & technology spread

Significant application coverage Medium/lower application coverageStronger focus Lower focusStronger focus Lower focus

BEVERAGES CHEMICAL DAIRY FARMINGDAIRY PROCESSING FOOD PHARMA OTHERS

ALFA LAVAL

DeLAVAL

TETRA PAK

BÜHLER

JBT FOODTECH

KRONES

MAREL

EQUIPMENT SOLUTIONS

SPX FLOW

GEA at JP Morgan Conference June 2018

Note: GEA view

ApplicationsGEA MANAGEMENT VIEW

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Comparable sales shareNon-comparable sales share

Comparable share of peer sales

GEA JBT FOODTECH

GEA ALFA LAVAL GEA DELAVAL1 GEA TETRA PAK2 GEA3 BÜHLER

GEA SPX FLOWGEA MARELGEA KRONES

COMPARABLE SALES SHARE FY17

1. FY2016

6-7 largest GEA competitors compete on average in around 20% of bids against us

GEA at JP Morgan Conference June 2018

GEA: Separation, Flow Components

Alfa Laval: Separation, Fluid Handling in Div. Food & WaterGEA: APC Dairy, APC Beverages, APC Food, Homogenizer

Tetra Pak: Processing

GEA: APC Food, Pasta & Extruded Snacks

Bühler: Parts of Value Nutrition, and Consumer Food

GEA: APC Food, Food Processing & Packaging

JBT FoodTech: Liquid Foods, Protein Technology

GEA: APC Beverages, Homogenizer, Flow Components

Krones: Entire business

GEA: Food Processing & Packaging

Marel: Entire business excl. MPS

GEA: Milking Dairy Farming

DELAVAL: Entire business

2. FY2015

GEA: APC Dairy, APC Food (parts), Homog., Flow C..

SPX Flow: Mainly Food and Beverages

3. Including pro forma Pavan acquisition revenues

GEA MANAGEMENT VIEW

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Exposure to multiple industries caters on robustness

over the various cycles

Growing markets portfolio catering on robustness

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

20

-10

-20

-30

10

0

30

Market development by Industryyoy growth

1. Non-weighted average

Source: Capital IQ, VDMA, VCI, Chemdata International, Oxford Economics, McKinsey, IFCN, US Census Bureau, EuroStat, Evaluate Pharma, IHS Markit, IFPM

Structurally growing market

Volatile milk prices

Stable growth of underlying base business

Larger project business rather cyclical

Equipment with stable market growth

Greenfield projects rather cyclical

Pricing pressure

Structurally stable market growth

Differing growth profile across sub-industries

Rather cyclical market

Innovations drive demand (e.g. Lithium)

Global medicine spending growing

Lower volatility due to increasing regulatory standards

GEA at JP Morgan Conference June 2018

3-4%

Dairy

Farming

Dairy

Processing

Beverages

Food

Pharma

ChemicalsMid-term

market outlook1

Beverages Pharma ChemicalDairy ProcessingDairy Farming Food Average1

Mid-term market outlook

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Opportunities for new digital solutions are tapped

GEA at JP Morgan Conference June 2018

GEA

Performance Plus

DAIRY

NET

DIGITAL

TWINREMOTE

EYEWEAR

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Service – Share of Sales vs. Benchmarks

GEA at JP Morgan Conference June 2018

SERVICE SHARE

35% 35% 38% 39% 39%

FY13 FY17FY16FY15FY14

BA Equipment(% of sales)

BA Solutions(% of sales)

1. Comment on CAGR: Relates to Service sales in €m from 2013 to 2017

2. Comment on peers: Due to the heterogeneous product portfolio and maturity level, peers shall be compared on a like-for-like

base, i.e. equipment focused companies to be compared with BA-E and engineering companies to be compared with BA-S

(peer group contains companies like ABB, Alfa Laval, Andritz, Bühler, JBT, etc.)

18% 20% 22%22%

FY15 FY16 FY17FY14

19%

FY13

PEERS2

Ø 36-42%

PEERS2

Ø 20-27%

+5.4%CAGR1 +7.0%CAGR1

31%GEA GROUP 2017

• Solid development of GEA

Service share in the

recent years

• Comparable peers have in

general similar Service

share

• Aspiration to further grow

Service business and

Service share:

• 32-33% by 2020

• 33-35% by 2022

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Service – Life cycle

GEA at JP Morgan Conference June 2018

Beginning of life servicesInstallation // Commissioning // Training

Lifetime servicesSpare parts // Corrective maintenance //

Preventive maintenance

Extended life servicesUpgrades/Modernization/Optimization // Predictive

maintenance // Factory-rebuilt equipment

Consulting services & operations Performance contracts // On-site project support

// Service software products

WE SERVE THE ENTIRE LIFE CYCLE IN ORDER TO HAVE CONTINUOUS TOUCHPOINTS TO OUR CUSTOMERS

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Systems and Processes

GEA at JP Morgan Conference June 2018

General timeline

2017 2018 2019 2020

One Finance

2017 2018 2019 2020

Workday

Project Execution Excellence

IT Systems

UPDATE GOALS & BENEFITS

• Risk management process

& project governance

process improved

• Efficient project execution

process

• Increased project profitability

• Common HR Management

System & Tool

• Simplified & harmonized HR

processes

• More effective steering of

OneGEA organization

• Higher transparency &

efficient processes

• Workday tool rolled out

group-wide

• Core functions implemented;

full function ramp-up in waves

• Key system interfaces

have been established

• Overhead reporting to be

implemented in 2018

• Cloud migration of IT

applications in progress

• Harmonization of ERP

kicked-off

• Complexity reduction by consolidated ERP landscape

• Increased efficiency of IT

backbone

Ramp-up Ongoing

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OneGEA manages businesses across legal entitiesOneGEA Finance reports data accordingly

Products, Applications,

Services

Regio

ns / C

ou

ntr

ies

Managers of

Products (BA-E), or

Applications (BA-S), or

Service categories

?

GEA at JP Morgan Conference June 2018

Various product groups / applications

GEA until 2015 One GEA

Ma

na

ge

rs o

f

Reg

ion

s o

r

Co

un

trie

s

Example: „How

much money

do we make with

dairy separators

in the US?“

Sa

les

in

va

rio

us

co

un

trie

s

Ac

ros

s c

ou

ntr

ies

Across products and applications

Example: „How

much money

do we make

in company XYZ

located in country

ABC?“

• Central view on KPIs of

individual legal entities

without granularity

• No view across legal entities

by application, product or

service category

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Global Manufacturing Footprint – Going forward

-8 sites

2015

68 sites60 sites1)

2018

FLEXIBILIZE

PRODUCTION EXCELLENCE

2018 2020 2022+

Further consoli-

dation of production

volumes in multi-

purpose sites to

better balance

demand fluctuations

Realization of

synergy potential

across business

areas and utilization

of best cost country

advantages

50 – 56 sitestarget size1)2)

41 – 50 sitestarget size1)2)

OPTIMIZE

1) excl. recent M&A activities (Vipoll and Pavan) 2) excl. future M&A activities

GEA at JP Morgan Conference June 2018

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Procurement - Initiatives

GEA at JP Morgan Conference June 2018

####• Accelerate supply base consolidation including shift to Best-Cost-Countries

& extend coverage of global spend by category management

####

…• Expand procurement initiative to cross-functional GEA cost optimization program

• Further increase spend transparency to drive both commercial and technical

levers like standardization & modularization

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GEA mid-term guidance FY2022

GEA at JP Morgan Conference June 2018

Group-level guidance Comment

Sales

Operating

EBITDA

Margin

CAGR 2018-22 of

3.5 – 4.5%

Increase to

13.5 – 15.5%

Including acquisitions Pavan and Vipoll

Major future portfolio measures not included

At average 2017 FX rates

Going forward, adjustments will only be made

for strategic projects such as manufacturing

footprint, other material restructuring and

portfolio measures

Mid-term guidance is based on the assumption of no major changes in global economic

growth and no substantial slow-down in any of GEA’s customer industries

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Building blocks of midterm margin improvement

GEA at JP Morgan Conference June 2018

Volume

Margin improvement

from

12.0%

to

13.0%

Forecast 2018

Planning assumption:

at average F/X rates 2017

from

0.5%

to

0.8%

Planning assumption:

constant product mix

FootprintProcurement & EfficiencyEBITDA

target corridor

Value Pricing

Headwinds (cost increases) will be largely compensated through pricing and efficiency gains

from

0.3%

to

0.6%

from

0.4%

to

0.6%

from

0.3%

to

0.5%

from

13.5%

to

15.5%

EBITDA

target corridor

2022

Note: Indicative margin improvement ranges based on 2022 runrate targets

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