Results Presentation Q2 2019
Disclaimer 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 of order intake and sales by region as well as by customer industry may vary from 100%. 2 2 GEA Q2 2019 Figures
1. Results Q2 2019 2. Financials Q2 2019 3. Outlook FY 2019 3 3
Executive Summary Q2 2019 FY 2019 Guidance confirmed ➢ Q2 order intake declined by 17% YoY after a record order intake level in prior Order Intake year’s Q2 – however, H1 order intake only down by 6% YoY €m 1,147 ➢ Sales grew by 2% YoY driven by a strong service business (growing by 7.1% Sales €m 1,247 YoY); record sales volume in both Business Areas ➢ EBITDA 1 burdened by special effects in the amount of €30m – EBITDA 1 would EBITDA 1 have been otherwise almost on prior year’s level €m 111 ➢ EBIT 1 down by €34m YoY to €57m mainly driven by special effects impacting EBIT 1 EBITDA 1 €m 57 ➢ ROCE 1,2 down YoY from 15.5% to 10.5% due to a decline in L4Q EBIT 1 and an ROCE 1,2 increase in L4Q capital employed resulting from IFRS 16 phasing in H1 2019 10.5% 1 Before effects from restructuring (see Annual Report, page 28 ff.); previous year: pro-forma figure incl. IFRS 16 effects 2 Capital employed excluding goodwill from the acquisition of the former GEA AG by former Metallgesellschaft AG in 1999 (average of the last 4 quarters); previous year: pro-forma figure incl. IFRS 16 effects 4 GEA Q2 2019 Figures
Strategic update New organizational structure ➢ Giving P&L responsibility back to the operating divisions ➢ Preparations for the start of the gradual implementation of the new divisional structure on October 1 st are on track ➢ C-level division teams 13 out of 15 positions and all 7 regional heads hired ➢ Country organization serves as a local sales and service organization with one face to the customer ➢ Process to further outline the dedicated divisional set-up at country level to be carried out within the next weeks ➢ Global production, global procurement and global technology staffed and operational 5 GEA Q2 2019 Figures
Strategic update Restructuring BA Solutions Dairy ➢ On track with the restructuring of BA Solutions Dairy ➢ Total reduction of ~230 FTE with total expenses of €30m to €35m are identified – both within the guided ranges (FTE: 200 – 250; restructuring expenses: €30m to €45m) ➢ Restructuring expenses of €15m booked in Q2 2019 ➢ Further restructuring expenses of ~€9m to be booked in H2 2019 ➢ Potential annual run rate of savings of ~€17m to kick -in from 2020 onwards; full run rate impact to be visible in 2021 due to structured process of exits 6 GEA Q2 2019 Figures
1. Results Q2 2019 2. Financials Q2 2019 3. Outlook FY 2019 7
Order Intake, Sales and Book-to-Bill 1,400 €m ➢ Sales reached a new record level for a Q2 1,383 1,373 1,331 1,317 ➢ Low book-to-bill due to record sales and low 1,200 €m 1,247 1,241 1,235 1,227 1,197 order intake 1,189 1,186 1,147 1,138 1,131 1,103 1,000 €m ➢ Order intake expected to recover in H2 1,057 1,057 1,039 ➢ Order intake below last year’s all -time high level 800 €m also due to order deferrals by customers YoY Development 600 €m ➢ Stable base orders (<€1m) 400 €m QoQ Development 200 €m ➢ Decline due to weaker order intake in the medium (>€5m) and large order brackets 1.09 0.93 0.99 1.06 1.13 1.01 0.90 1.12 0.92 0 €m (>€15m) Q2 17 Q2 18 Q2 19 Order Intake Sales BtB 8 GEA Q2 2019 Figures
EBITDA 1, EBIT 1 and ROCE 1,2 250 €m 50% ➢ Accounting change IFRS 16 from Q1 2019 Change in IFRS 16 onwards 45% accounting 200 €m 40% 201 ➢ IFRS 16 impacts EBITDA as well as EBIT 35% positively 168 150 €m 30% 157 ➢ Q2 2019 EBITDA 1 and EBIT 1 down YoY due to 25% 21.9%21.8% 128 126 19.8% special effects despite positive IFRS 16 impact 115 100 €m 112 111 20% 16.8%16.0%15.3% 97 91 91 87 15% 12.3%12.0% 83 ➢ Excluding special effects, EBITDA 1 would have 75 10.5% been almost on prior year’s level 50 €m 61 10% 57 5% 27 27 ➢ ROCE 1,2 declined YoY and QoQ also due to the 0 €m 0% phasing in effect of the IFRS 16 accounting Q2 17 Q2 18 Q2 19 change 1 1 1,2 EBITDA EBIT ROCE 1 Before effects from restructuring (see Annual Report, page 28 ff.); 2 Capital employed excluding goodwill from the acquisition of the former GEA AG by former Metallgesellschaft AG in 1999 (average of the last 4 quarters) 9 GEA Q2 2019 Figures
EBITDA before restructuring YoY Development [€m] • - €5m amortization of R&D projects (no EBITDA effect due to offsetting effect in D&A addback) • - €15m new machines (therein - €13m backlog review BA -S ) • - €1m service • +€8m FX • +€3m total delta D&A 142 8 -19 16 126 -4 1 • - €4m new machines 111 • +€13m service -28 11 • - €3m mainly personnel expenses • - €16m legal disputes • - €13m Selling expenses (mainly • - €9m release of provision Q2 18 personnel expenses- €10m) • +€2m release of bad debt • +€13m Administration expenses provision • +€5m release personnel provision • +€2m release of provision OneGEA Finance EBITDA IFRS 16 Pro Forma Volume Margin R&D SG&A Other FX and EBITDA Q2 18 EBITDA Delta DA Q2 19 Q2 18 Expenses highlighted in bold letters are extraordinary effects and sum up to - €30m 10 GEA Q2 2019 Figures
EBITDA before restructuring per Segment YoY Development [€m] 142 • - €9m release of provision Q2 18 16 • +€5m release personnel provision -22 126 • - €3m personnel expenses • +€3m Charging / Trademark fee • +€2m release of provision OneGEA Finance 111 -15 • - €16m legal disputes 8 • +€2m release of bad -1 debt provision • - €3m FTE increase • - €13m backlog review • +€4m BA -E • - €2m new machines • +€3m BA -S • - €9m personnel expenses • +€1m Other • +€4m service EBITDA Q2 18 IFRS 16 Pro Forma BA-E BA-S GCC/RoC FX EBITDA Q2 19 EBITDA Q2 18 Expenses highlighted in bold letters are extraordinary effects and sum up to - €30m 11 GEA Q2 2019 Figures
Service Sales 500 €m 428 ➢ Service sales grew by 7.1% or by 6.7% excl. FX YoY 415 394 to €394m 400 €m 368 366 346 345 331 329 171 ➢ Record service sales volumes for both Business 171 153 Areas for Q2 144 138 300 €m 117 133 117 123 ➢ Growth at Business Area Equipment was especially driven by service in Separation and Food Processing 200 €m & Packaging 269 260 255 243 241 ➢ Growth at both Business Areas supported by better 237 223 225 220 100 €m pricing and by solid underlying demand ➢ For the first time on a L4Q perspective, BA 0 €m Equipment reached €1bn in service sales Q2 17 Q2 18 Q2 19 BA Equipment BA Solutions Please note that the differences between the sum of the BAs and the Group are explained by consolidation/others 12 GEA Q2 2019 Figures
Net working capital to sales ratio 1,200€m 20% 18.9% 18.6% 17.9% ➢ Net working capital stood at the end of Q2 19 at €906m or 17.2% 18% 18.6% of L4Q sales – an increase of €59m or 70bps YoY 16.4% 15.6% 16.0% 1,000€m 15.5% 16% 14.6% 904 906 14% ➢ Inventories increased YoY by € 43m partly due to safety 800€m 848 833 stock related to a relocation of production 12% 761 747 731 706 674 600€m 10% ➢ Net trade receivables (without POC) were down by €72m 8% YoY while net POC receivables increased by €46m 400€m 6% 4% ➢ Trade payables declined by €41m thus resulting in an 200€m increase of net working capital 2% 0€m 0% Q2 17 Q2 18 Q2 19 ➢ Group wide project to reduce net working capital NWC as of reporting date started on August 1 st NWC as of reporting date as % of sales (L4Q) 13 GEA Q2 2019 Figures
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