GEA presentation at Bank of America Merrill Lynch Conference · · 2018-05-04ready meals,...
Transcript of GEA presentation at Bank of America Merrill Lynch Conference · · 2018-05-04ready meals,...
GEA presentation at Bank of America Merrill Lynch Conference
March 20th 2018
GEA GROUP CFO, DR HELMUT SCHMALE
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Mega trends support GEA business
GEA at Bank of America MerrillLynch Conference March 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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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 Bank of America MerrillLynch Conference March 2018
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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 Bank of America MerrillLynch Conference March 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 Bank of America MerrillLynch Conference March 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 Bank of America MerrillLynch Conference March 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 Bank of America MerrillLynch Conference March 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 Bank of America MerrillLynch Conference March 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
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-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 Bank of America MerrillLynch Conference March 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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Levers of growth
GEA at Bank of America MerrillLynch Conference March 2018
Technology trends
GEA is well positioned to
serve technologies for trends
Key account excellenceContinue building key account
management to further strengthen
business with global clients, esp. to
support growth in Emerging Markets
Further sales
professionalization
GEA is performing a review
of the sales setup to fully seize growth
opportunities in current white spots
Service
Continue pushing Service
business to next level
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Opportunities for new digital solutions are tapped
GEA at Bank of America MerrillLynch Conference March 2018
GEA
Performance Plus
DAIRY
NET
DIGITAL
TWINREMOTE
EYEWEAR
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Service – Share of Sales vs. Benchmarks
GEA at Bank of America MerrillLynch Conference March 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 Bank of America MerrillLynch Conference March 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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We implemented significant strategic initiatives…
GEA at Bank of America MerrillLynch Conference March 2018
Formulation of GEA’s overall strategic
direction & priorities
In-depth analysis of >20 industries and prioritization
of focus growth areas
Transformation into OneGEA
Portfolio review and subsequent disposal of
HX business
Applications, Regions, Technology, Excellence set as strategic pillars
Further leverage of OneGEA organization
for growth & efficiency
A R T E
2013 2014 2015 2016 After 20162012
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Systems and Processes
GEA at Bank of America MerrillLynch Conference March 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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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 Bank of America MerrillLynch Conference March 2018
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Procurement - Initiatives
GEA at Bank of America MerrillLynch Conference March 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 guidance FY2018
GEA at Bank of America MerrillLynch Conference March 2018
Group-level guidance Comment
Sales
Operating
EBITDA
margin
Cash flow
driver margin
5.0 6.0% growth
12.0 13.0%
8.7 9.7%
Including acquisitions Pavan and Vipoll
At average 2017 FX rates
Excluding strategic projects
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Strategic Projects
GEA at Bank of America MerrillLynch Conference March 2018
• Three main categories
remain as strategic
projects in 2018:
• Restructuring /
footprint will be the
main focus in 2018
• IT transformation and
Steering systems will
be continued in 2018
Estimate to Actual 2017(rounded)
Initial to Latest Estimate 2018(rounded)
60
30
55
40
-45
Capex
P&L impact
FY 2017
Actual
70
FY 2017
Estimate
115
45 40
45
+30/+50
Capex
P&L impact
Latest 2018
Estimate
120-140
80-100
Initial 2018
Estimate
90
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GEA mid-term guidance FY2022
GEA at Bank of America MerrillLynch Conference March 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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Selective M&A and active portfolio management
GEA at Bank of America MerrillLynch Conference March 2018
Divested 2014 Divested 2016Note: not published
Divested 2017
… based on a set of comprehensive criteria
Recent divestments
ARTE fit Strategic fit
Value creation
Applications
Regions
Technologies
Func. Excellence
Markets
Growth
Profitability
Competition
Margin
WACC
Cash Flow
Return
Portfolio under review
Review of non-core
businesses
Broad option space
• Special attention
• Restructuring
• Divestment
Progress to be
communicated in
2018
Recent M&AIn the last 24 months GEA analyzed >50
M&A opportunities
CMT HILGE PAVAN
COMAS IMAFORNI VIPOLL
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Disclaimer
GEA at Bank of America MerrillLynch Conference March 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%.