GEA Group J.P. Morgan European Capital Goods CEO Conference - - PowerPoint PPT Presentation

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GEA Group J.P. Morgan European Capital Goods CEO Conference - - PowerPoint PPT Presentation

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GEA Group J.P. Morgan European Capital Goods CEO Conference PENNYHILL PARK HOTEL, BAGSHOT, UK, JUNE 15TH 2017 GEA in a nutshell GEA is a global leader in equipment and process technology providing innovative solutions for smart food processing

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SLIDE 1

GEA Group

J.P. Morgan European Capital Goods CEO Conference

PENNYHILL PARK HOTEL, BAGSHOT, UK, JUNE 15TH 2017

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SLIDE 2

GEA is a global leader in equipment and process technology providing innovative solutions for smart food processing and for a more efficient use of energy resources.

GEA in a nutshell

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J.P. Morgan European Capital Goods CEO Conference

Revenue EUR 4.6bn (FY15) EUR 4.5bn (FY16) Operating EBIT-Margin 11.7% (FY15) 10.8% (FY 16) Employees

  • approx. 17,000

(March 17) Market Cap EUR 7.0 bn (May 17)

Dairy Farming Dairy Processing Beverages Food

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SLIDE 3

You are in touch with GEA every day

3 Approximately one quarter of processed milk comes from GEA production systems Around every third process line for instant coffee was installed by GEA Every third chicken nugget is produced by GEA technology

  • Approx. every second

liter of beer is brewed with the aid of systems and process solutions from GEA Every second container ship in the world sails with GEA marine equipment on board About one fourth of waste- water sludge from petroleum and natural gas processing is dewatered by GEA high- performance decanters Every fourth liter of human blood is handled by GEA equipment More than one third

  • f all polymer

producer are using GEA Drying technology

Dairy Farming and Processing Food Beverages Pharma Chemical Utilities Marine

J.P. Morgan European Capital Goods CEO Conference

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SLIDE 4

Megatrends – understanding and taking advantage of opportunities

J.P. Morgan European Capital Goods CEO Conference

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GREATER FOOD SAFETY AND QUALITY Readiness of industry to invest more for greater process reliability certified hygienic/aseptic processes and components to meet the strict standards of the industry GEA offers ENERGY SCARCITY AND STRICTER ENVIRONMENTAL REGULATIONS Greater interest in efficient and resource-saving production processes intelligent engineering processes for resource-economical technologies, energy-saving machines and processes, as well as heat recovery GEA offers URBANIZATION WITH GROWING MIDDLE CLASS Growing demand for processed food and medication components and process technology for processed food, ready meals, fortified lifestyle beverages and food, medications GEA offers

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SLIDE 5

GEA‘s business model

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J.P. Morgan European Capital Goods CEO Conference

Equipment Solutions Service

  • Standardized and partly customized

equipment offering

  • Goods are generally manufactured in

large quantity and through a high- volume production based on standardization and modularization

  • Highly customized and modularized

solutions delivered in projects

  • The offering meets specific

application or client needs

  • Product, user and result-
  • riented service offering

covering whole plant life cycle

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SLIDE 6

Successful strategic realignment

  • ver a period of 5 years

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Which core businesses? Quo vadis, GEA? The road ahead 2012 Target definition Strategic portfolio review GEA 2020 Prioritization of applications (in the food sector) 2013 In which growth markets? 2012 – 2013 Based on which corporate structure? 2014 – 2016 Fit for 2020 Reorganization Based on which initiatives? 2017 & after Completion of OneGEA Procurement & manufacturing, Control systems, Digitalization, IT architecture

J.P. Morgan European Capital Goods CEO Conference

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SLIDE 7

ARTE framework as pillars for GEA’s strategy & value creation

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J.P. Morgan European Capital Goods CEO Conference

Target Footprint 2020

Regions

  • Capture global growth
  • pportunities
  • Expand local presence
  • Coordinate regional

approaches across GEA

Technologies

  • Strengthen innovation

and technological leadership

  • Foster cross-business

collaboration in R&D

Functional

Excellence

  • Increase efficiency

in operations and support functions

  • Reduce organizational

complexity

Applications

  • Exploit market potential

in target applications

  • Align GEA-wide

application strategy and customer approach

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SLIDE 8

Project “Fit for 2020”: From four stand-alone Segments to two integrated Business Areas

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J.P. Morgan European Capital Goods CEO Conference

Former organization New current organization

  • Stand-alone effective Segments driving
  • wn technologies and market approaches
  • Limited group perspective and role of the

corporate center

  • Each Segment with individual go-to-market

concepts and regional footprint

  • Bundling of Segments into two BAs

according to business model logic

  • “OneGEA” in countries as a platform for

growth within regions / countries

  • Strengthening and streamlining of

global group functions

  • Increased efficiency and standardization in

newly established Shared Service Center Executive Board

RT FT ME PE Head- quarter

Regions Regions Regions Regions

Support Support Support Support

BA Equipment BA Solutions Global Corp. Center SSC

Regions / Countries

Executive Board

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SLIDE 9

Strategic projects to complete OneGEA

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J.P. Morgan European Capital Goods CEO Conference

Steering Systems

  • OneGEA Finance
  • Project Database
  • HR software (Workday)
  • Common CRM (also enhances

pipeline visibility) Operational Excellence

  • Manufacturing footprint
  • Procurement Excellence
  • OneEngineering

Digitalization @ GEA

  • Processes
  • Products/services

IT-Excellence

  • IT Platform outsourcing (Platform as a

Service)

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SLIDE 10

Chemical

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

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J.P. Morgan European Capital Goods CEO Conference

Technologies & Components Application Engineering Sales & Service Support BA Solutions Beverage Food Dairy Pharma Utilities BA Equipment

Customer

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SLIDE 11

Milk Fat Products

Sour Cream Butter Dairy Spreads Sweet Cream Butter Anhydrous Milk Fat (AMF) Ghee

Dairy: GEAs application overview

Product Clusters Nutritional Formula

Infant Milk Formula Follow on / follow up Formula Dietary Nutrition Growing up Milk

Applications Market Milk Products

Pasteurized / Fresh Milk Ultra Heat Treated (UHT) Milk Extended Shelf Life (ESL) Milk Flavoured Milk Milk Mix Drinks Condensed Milk Sweetened Condensed Milk Whipped Cream

Dairy Ingredients

Whey & Milk Permeate Powder Whey Powder Lactose Powder WPC / WPI Powder (Whey Protein Concentrate / Isolate) Casein / Caseinate Powder MPC / MPI Powder (Milk Protein Concentrate / Isolate) Yoghurt Powder Cheese Powder

Milk Powders

Skim Milk Powder Whole Milk Powder Fat Filled Milk Powder Buttermilk Powder Coffee & Tea Whitener

Cheese

Fresh Cheese Cream Cheese Soft Cheese Semi Hard Cheese Hard Cheese Processed Cheese Pasta Filata Cheese White Cheese Desserts & Fermented Products Stirred Yoghurt Set Yoghurt Drinking Yoghurt Sour Milk Drinks Sour Cream Buttermilk Concentrated Yoghurt Desserts Rice Desserts

Ice Cream

Ice Milk / Cream Frozen Yoghurt Sherbet Sorbet / Water Ice Dessert Ice Cream

J.P. Morgan European Capital Goods CEO Conference

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SLIDE 12

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Dairy - Uses of milk powder and dairy ingredients

  • Infant formula
  • Yogurt
  • Drink milk
  • Other dairy products
  • Ice Cream
  • Chocolate
  • Biscuits/bakery
  • Sports nutrition
  • Therapeutic Food

J.P. Morgan European Capital Goods CEO Conference

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Frozen Food

GEA’s food expertise covers a wide range of applications and sub-applications

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J.P. Morgan European Capital Goods CEO Conference

SUB APPLICATIONS Coffee & Tea Edible Oils Starch & Starch Derivatives Ingredients Liquid Food Meats & Seafood Fruits & Vegetables Ready Meals Bakery Confectionary & Snacks

Edible Oils Margarine Spreadable Oils & Fats Sauces Dressings Processed Meat & Poultry Processed Fish & Seafood Instant Coffee Instant Tea Coffee Extract Tea Extract Cocoa Powder X-in-1 (Coffee/Tea; Milk; Sugar) Starch Modified Starch Cultures Emulsifiers Flavors Frozen Fruit Frozen Processed Potatoes Meat Substitutes Pizza Ready Meals Prepared Salads Bread Cakes Biscuits Pastries Frozen Baked Goods Frozen Desserts Chocolate Confectionary Sugar Confectionary Fruit Snacks & Nuts Snack Bars Gum Chips & Tortilla Chips Extruded Snacks Popcorn Pretzels Frozen Vegetables Mayonnaise Ketchup Tomato Pastes & Purees Spreads Soups Dried Fruits & Vegetables Coffee / Tea Whitener Proteins Raising Agents Sugars & Sweeteners Fibers Pet Food Ingredients

Coffee & Tea Oils, Starch & Ingr. Bakery & Confectionary Sub-APC:

Starch Derivatives Other Food Applications Animal Feed Pet Food Baby Food (Non-Dairy)

APPLICATIONS

 Large customer portfolios covering multiple applications  GEA technologies used across multiple applications

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The OneGEA setup for Food Applications should reflect the complexity of our customers’ business

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J.P. Morgan European Capital Goods CEO Conference

Source: http://www.behindthebrands.org/ (2014)

  • Food industry

dominated by large global producers

  • Leading

producers covering a wide range of end- products

  • Application

coverage across many types of raw materials and many possible processing methods

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SLIDE 15

Revenue by application

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J.P. Morgan European Capital Goods CEO Conference

w

Dairy Farming Dairy Processing Food Beverages

w

Pharma/Chemical Other Industries 70 % 30 % Revenue 2016: EUR 4,492 million 15 % 12 % 20 % 25 % 13 % 15 %

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Q2 12 Q4 12 Q2 13 Q4 13 Q2 14 Q4 14 Q2 15 Q4 15 Q2 16 Q4 16 0% 20% 40% 60% 80% 100% 120% 140% 160% Q2 12 Q4 12 Q2 13 Q4 13 Q2 14 Q4 14 Q2 15 Q4 15 Q2 16 Q4 16

L4Q order intake and sales indexed since Q2 2012

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Order Intake Sales

J.P. Morgan European Capital Goods CEO Conference

CAGR Q2 12 - Q1 17: Dairy Farming 1% Dairy Processing 2% GEA 3% CAGR Q2 12 - Q1 17: Food 4% Beverages 0% GEA 3% CAGR Q2 12 - Q1 17: Pharma/Chemical 5% Other Industries 1% GEA 3%

Q2 12 Q4 12 Q2 13 Q4 13 Q2 14 Q4 14 Q2 15 Q4 15 Q2 16 Q4 16

CAGR Q2 12 - Q1 17: Dairy Farming 1% Dairy Processing 0% GEA 2% CAGR Q2 12 - Q1 17: Food 4% Beverages

  • 2%

GEA 2% CAGR Q2 12 - Q1 17: Pharma/Chemical 5% Other Industries 2% GEA 2%

0% 20% 40% 60% 80% 100% 120% 140% 160%

Q1 17 Q2 12 Q1 13 Q1 15 Q1 14 Q1 16 Q1 17 Q2 12 Q1 13 Q1 15 Q1 14 Q1 16 Q1 17 Q1 13 Q1 15 Q1 14 Q1 16 Q2 12

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SLIDE 17

Recent examples of groundbreaking innovations

J.P. Morgan European Capital Goods CEO Conference

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GEA MultiDrum

  • Re-creates delicious home-style breading
  • n an industrial scale
  • No additional machines are needed to

converge and spread the products, the line

  • ccupies less space and requires much

less labor

  • The design is easy to clean, and thanks to

the GEA OptiAir technology, the amount of dust in the work environment is greatly reduced.

Breader

GEA Monobox

  • Utilization of the modular platform as centre

part within the Monobox, GEA’s next robot generation for smaller family farms

  • Next generation of 3D camera
  • New robot wash concept to minimize water

and electricity consumption

Milking stall module

  • Faster, more consistent and reliable tablet

production with reduced use of resources

  • The platforms take up 70% less space than

batch plants and can be built more quickly

  • FDA approval for a therapeutic that was

both developed and commercially manufactured using GEA’s ConsiGma™ technology

Tablet press

GEA ConsiGma™

Dairy Farming Food Pharma

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Customer Story: GEA introduces first fully automated Coating Line for Lollypops

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J.P. Morgan European Capital Goods CEO Conference

  • A Mexican Customer desired a fully automated production line for lollypops with chili powder coating

 GEA developed such an automated line that can coat lollypops with a powder or granulate

  • Global market introduction on the recent Interpack Fair

http://www.gea.com/de/news/corporate-news/2016/gea-introduces-the-worlds-first-fully-automated-lollipop-coating-line.jsp

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Current scope of GEA’s Shared Service Center

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GEA SSC

Finance/ Accounting Human Resources IT

  • Accounts payable
  • Accounts receivable
  • Asset schedule
  • Travel expenses
  • Standard reporting
  • IT Delivery &

Enterprise Management

  • IT Security & Data

protection

  • ERP Process

Customizing

  • IT Operations
  • Employee Lifecycle

Management

  • Recruiting

administration

  • Training administration
  • HR first-level support
  • Payroll
  • HR reporting
  • Travel & Fleet

management

J.P. Morgan European Capital Goods CEO Conference

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Transition in all countries implemented, further process optimization ahead

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2015 H2

Transition of local back office functions to 3rd party SSC (”lift and shift“) Transformation

  • f processes
  • Finance/

Accounting

  • HR
  • Drive

digitalization by standardizing processes

  • Extend scope
  • f services

beyond

2016 2017

J.P. Morgan European Capital Goods CEO Conference

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SLIDE 21

Service Yesterday Service Today/Tomorrow

OneGEA = One face to the customer

21 BU Flow Components BU Evaporation BU Separation BU Drying Customer Customer GEA Service Manager BU Liquid

J.P. Morgan European Capital Goods CEO Conference

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Service prior to OneGEA Future business model

GEA Service: Future business model

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Reactive spare parts business …

  • > 70% spare parts sales
  • Primarily reactive service sales & focus on new

project business, rather than service

  • No standardized business approach

… proactive solutions business

  • Solution-oriented customer service (ARTE)
  • Pro-active global service sales strategy (ARTE)
  • Focus on customer plant life cycle & total cost of
  • wnership (ARTE)
  • Efficiencies through use of standardized products

& processes (ARTE)

J.P. Morgan European Capital Goods CEO Conference

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SLIDE 23

GEA Service portfolio structure at a glance

Beginning of life services Training Installation Commissioning Spare parts Corrective maintenance Farm Services Preventive maintenance Second-hand equipment Up-grades Modernization Optimization Predictive maintenance Performance contracts Service software products On-site project support Consulting services & operations Life-time services Extended-life services

Plant Life Cycle

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J.P. Morgan European Capital Goods CEO Conference

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Current Share Buyback Program

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J.P. Morgan European Capital Goods CEO Conference

Decision timeline announced in Oct 2016 Buy back program

  • Up to EUR 450 m
  • Implementation expected before

end of February 2018

  • Repurchased shares to be

cancelled

  • Number of outstanding shares as

at 31.12.2016: 192.5m

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GEA’s long-term strategic direction

J.P. Morgan European Capital Goods CEO Conference

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Pursue clear technology and market leadership Further develop food processing focus & solutions for demanding production processes Become truly global by getting closer to

  • ur customers

Use portfolio management as tool to leverage strengths & allocate resources Build an organization and capabilities to support strategic vision Drive sustainable value creation

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Regional revenue split

Emerging Markets*

36 %

*According to the definition of emerging/developing economies given by the International Monetary Fund

Top 3 Countries

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J.P. Morgan European Capital Goods CEO Conference

North America DACH & Eastern Europe Latin America Western Europe, Middle East & Africa North and Central Europe Asia Pacific

18 % 15 % 20 % 23 % 18 % 6 %

USA 16 % China 8 % Germany 9 %

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SLIDE 27

Service sales growth YoY of +5% (+5% adjusted)

Service business as of Q1 2017 L4Q: 31% of sales

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J.P. Morgan European Capital Goods CEO Conference

Note: adjusted = before currency translation and structural effects

1,344 878 503 1,412 901 549 0 €m 200 €m 400 €m 600 €m 800 €m 1,000 €m 1,200 €m 1,400 €m 1,600 €m GEA BA Equipment BA Solutions Q1 16 L4Q Q1 17 L4Q 30% 31% 38% 39% 21% 22%

adjusted:

+5% +5%

adjusted:

+3% +3%

adjusted:

+9% +9%

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Increasing economic & political uncertainties forcing companies to increase flexibility

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J.P. Morgan European Capital Goods CEO Conference

Economic & political uncertainties increasing … … forcing enterprises to adapt

  • Business models need to be adapted

and global flexibility increased to balance out these risks

  • Particularly asset- and capex-

intensive functions like manufacturing need to get

  • ptimized to act flexible
  • Therefore the right global

configuration of manufacturing plants is fundamental to preserve global competitiveness

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SLIDE 29

FY 2017 guidance

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J.P. Morgan European Capital Goods CEO Conference

We are aiming for, in the absence of:

  • any further weakening of global economic growth and
  • in particular, material weakening in any of our relevant customer industries, or adverse shifts in

demand among those industries resulting in a negative margin impact

  • material adverse currency (translation or competitive) impacts

Operating EBITDA (adjusted for strategic projects) (EURm)

620 – 670

Operating Cash Flow Driver Margin (based on operating EBITDA and on capex adjusted for strategic projects)

8.5% to 9.5%

Sales (in reported terms)

Moderate growth

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SLIDE 30

gea.com