J.P. Morgan European Capital Goods CEO Conference 2016 Jrg Oleas - - PowerPoint PPT Presentation

J.P. Morgan European Capital Goods CEO Conference 2016

Jürg Oleas

PENNYHILL PARK HOTEL, 10 JUNE 2016

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
• f 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 of order intake and sales by region as well as by customer industry may vary from 100%.

Disclaimer

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J.P. Morgan European Capital Goods CEO Conference June 2016

ARTE framework as pillars for GEA’s strategy

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J.P. Morgan European Capital Goods CEO Conference June 2016

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

colla-boration 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

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 June 2016

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

• “One GEA” 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

Equipment BA Solutions BA Global Corp. Center SSC Regions / Countries

Executive Board

Financial Targets for FY 2017 - FY 2020: Operating EBIT Margin: 13% to 16%

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J.P. Morgan European Capital Goods CEO Conference June 2016

* In FY 2015 €23m out of the guided €125m cost savings until 2017 were already achieved

GEA has gradually managed up Operating EBIT Margin to > 11%

8.8% 6.8% 8.4% 10.5% 10.3% 10.6% 11.4% 11.7% 2008 2009 2010 2011 2012 2013 2014 2015 2 1 2017 12 13 2020 Operating EBIT-Margin (LTM)

• Min. 13%
• Max. 16%

Upside:

• Service
• Op. leverage
• Underperforming unit

*

• GEA to now kick-off in-depth analysis of optimization potential
• Quantification of the details in H2 2016

Global manufacturing footprint instrumental for scale economies at GEA Material costs (~EUR 2.2bn) are the most significant cost lever for GEA

Implementation of “OneGEA” organization

• pens up further optimization potentials

J.P. Morgan European Capital Goods CEO Conference June 2016

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Use of funds: Acquisitions have priority

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J.P. Morgan European Capital Goods CEO Conference June 2016

• 2. Strengthen GEA’s application know-how by doing (bolt-on) acquisitions
• 3. Repayment of financial debt
• 4. Invest in organic business development (Service, R&D, regional presence)
• 5. Distribution of residual cash to shareholders

Capital allocation priorities

• 1. Dividend payments: Change of payout ratio from 1/3 to 40-50% of net income 



Acquisition criteria focus on strategy and value creation

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J.P. Morgan European Capital Goods CEO Conference June 2016

ARTE fit

A

Strategic fit

B

Value creation

C Market attractiveness Target attractiveness Earnings per share Total share- holder return DCF > Price CFD > hurdle rate ROCE > hurdle rate Functional Excellence

Regions Applications Technologies

Order trends by customer industry as of Q1 2016

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J.P. Morgan European Capital Goods CEO Conference June 2016

Q1 16 LTM Share of order intake Q/Q Y/Y Y/Y Q1 16 LTM Dairy Farming 13% Dairy Processing 24% Food 23% Beverages 12% Food & Beverages 72% Pharma 8% Chemical 7% Pharma/Chemical 15% Oil & Gas 1% Marine 3% Others 9% Other Industries 13% GEA Group 100% Q1 16 Quarter selective

Less than -5% Between -5% and -1% Between -1% and 1% Between 1% and 5% More than 5%

Frozen Food

Current scope of BA Solutions’ food applications

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J.P. Morgan European Capital Goods CEO Conference June 2016

Sub- Applications Coffee & Tea Edible Oils Starch & Starch Derivatives Ingredients Liquid Food Meat & Seafood Fruit & Vegetables Ready Meals Bakery

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 Bread Cakes Biscuits Pastries Frozen Baked Goods Frozen Desserts 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

Starch Derivatives

Applications

• In the absence of any further weakening of global economic growth and
• provided that there are no significant currency translation impacts, and
• before new acquisitions in 2016 as well as
• before one-offs we are aiming in FY 2016 for:

FY 2016 guidance

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Operating EBITDA (EURm)

645 – 715

Operating Cash Flow Driver Margin

10.0% - 11.0%

Sales

moderate growth

(in reported terms)

J.P. Morgan European Capital Goods CEO Conference June 2016

gea.com