Gea Group Aktiengesellschaft · XETR:G1A
Gea Group Aktiengesellschaft — Investor Day (October 2014)
45 slides from Gea Group Aktiengesellschaft's investor day presentation, Oct 13, 2014
Slide 1: GEA's strategic transformation to "OneGEA"
GEA’s strategic transformation to “OneGEA” Jürg Oleas, CEO GEA Group London, October 13, 2014 GEA Group Aktiengesellschaft
Slide 2: Disclaimer
Disclaimer 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 significantly from the estimates given here. Factors tha
Slide 3: Agenda
Agenda •1 Strategic Roadmap “GEA 2020” •2 ARTE framework as pillars for GEA’s strategy •3 Future organizational set-up “Fit for 2020” 3 GEA Capital Markets Day - GEA’s strategic transformation to “OneGEA” engineering for a better world
Slide 4: The steps of GEA's strategic transformation
The steps of GEA’s strategic transformation Where are With which With focus on which In which efficient we driving core businesses? growth areas? organizational setup? GEA? Divestment of HX Segment 2014: Concept 2012 2012 – 2013 2013 2015: Implementation GEA GEA “GEA 2020” “Fit for 2020” long-term s
Slide 5: GEA has focused its portfolio and organization in steps
GEA has focused its portfolio and organization in steps 2003 – 2008 2009 – 2014 Focus on specialty Carving out HX from among 5 divisions, Portfolio analysis mechanical engineering consolidating HX factory landscape and HX divestiture mg technologies1 GEA Group2 GEA Group3 GEA Group Specialty Mech. M
Slide 6: GEA's long-term strategic direction
GEA’s long-term strategic direction Agenda Pursue clear technology and market leadership Further develop food processing focus Guardrails for the and solutions for demanding production processes overall GEA Become global by getting closer strategy defined to our customers by GEA Executive Guardrails
Slide 7: GEA's long-term strategic direction
GEA’s long-term strategic direction • Intensify Foster Expand Sustain cash role Seek balanced Develop generation technology presence of the global in and GEA portfolio presencemindset Agenda across Group (cash and growGEA Group corporate attractive innovation niche center leadership generation, espe
Slide 8: GEA wants to serve markets with these criteria
GEA wants to serve markets with these criteria Customer industry willing to Limited project risk profile, Scope of supply limited pay a premium for process maximum project duration to elements directly quality and reliability 1-2 years controllable by us 8 GEA Capital Markets Day - GEA’s strategic t
Slide 9: What we like about the food industry (1): Steady growth rates
What we like about the food industry (1): Steady growth rates due to continuing urbanization Urbanization Today the world’s Illustrative Developed economies population lives (B) 300 KM 1.0 1.1 50% in the cities 2010 2050 necessary agricultural supply area 50% Emerging markets Shanghai in the country
Slide 10: What we like about the food industry (2): Stable consumer spending
What we like about the food industry (2): Stable consumer spending also in tough times Economically Economically good times difficult times 10 GEA Capital Markets Day - GEA’s strategic transformation to “OneGEA” engineering for a better world
Slide 11: What we like about the food industry (3): Branded food producers prefer precision equipment
What we like about the food industry (3): Branded food producers prefer precision equipment Food brands thrive on long-term product consistency in taste, texture and appearance. Precise process technology warrants that. 11 GEA Capital Markets Day - GEA’s strategic transformation to “OneGEA” engineer
Slide 12: What we like about the food industry (4): Zero failure tolerance
What we like about the food industry (4): Zero failure tolerance a significant entry barrier If equipment fails e.g. in the marine If equipment fails in the food industry, industry, the industrial customer suffers the end customer’s health could be at some efficiency loss risk 12 GEA Capital Markets
Slide 13: Periodic food scandals have sensitized customers for food safety
Periodic food scandals have sensitized customers for food safety concerns „Horse meat scandal in Europe” Source: NY Dailynews, 08.02.2013 „Avatar” meat (…) contaminated by a phosphorescent bacteria” (China) Source: Telegraph, 27.04.2011 13 GEA Capital Markets Day - GEA’s strategic transformation to
Slide 14: What we like about the food industry (5): Price not most decisive criterion
What we like about the food industry (5): Price apparently not the most decisive purchase criterion Ranking of key buying criterion according to GEA customer satisfaction survey, September 20141 Machine Quality and Performance 71% Price 30% Quality of After-Sales Service 23% … … … … … … For GEA’s cu
Slide 15: Our vision "GEA 2020": first choice of our customers
Our vision “GEA 2020”: To be the first choice of our customers GEA to become the globally leading engineering group to provide smart solutions to sophisticated process industries. In particular we always want to be the first choice of our customers in the relevant food industry. Our ARTE framework d
Slide 16: Agenda
Agenda •1 Strategic Roadmap “GEA 2020” •2 ARTE framework as pillars for GEA’s strategy •3 Future organizational set-up “Fit for 2020” 16 GEA Capital Markets Day - GEA’s strategic transformation to “OneGEA” engineering for a better world
Slide 17: ARTE framework as pillars for GEA's strategy
ARTE framework as pillars for GEA’s strategy Target Footprint 2020 Applications R egions Technologies EFunctional xcellence • Exploit market • Capture global • Strengthen • Increase efficiency potential in target growth opportunities innovation and in operations and applications • Expand local techn
Slide 18: Application strategy to support customers in solving process challenges
AR T E Application strategy to maximally support customers in solving their process challenges Customers Application Application strategy know-how …are looking for a • Expand GEA’s process solutions partner with end- competencies into new to-end know-how, who applications Unique selling proposition
Slide 19: Targeted applications for target footprint "GEA 2020"
AR T E Targeted applications for target footprint “GEA 2020” 1 5 Expand in total solutions for Grow leading position in dairy edible oils, starch & sugar 2 6 Grow leading position in liquid food Enter confectionery, biscuits & pizza 3 7 Strengthen packaging Strengthen personal care competencies 4 8
Slide 20: In cheese making technology, GEA had a gap
AR T E In cheese making technology, GEA had a gap… Milk intake & preparation Milk intake Milk storage Bacteria removal Standardization Pasteurization & preparation & distribution (optional) • Milking • Valves • Standardization • Sterilization • Heat parlor • Pumps separator separator exchanger • Tan
Slide 21: ...which GEA filled by taking over de KLOKSLAG
AR T E …which GEA filled by taking over de KLOKSLAG Milk intake & preparation Milk intake Milk storage Bacteria removal Standardization Pasteurization & preparation & distribution (optional) • Milking • Valves • Standardization • Sterilization • Heat parlor • Pumps separator separator exchanger • Ta
Slide 22: de KLOKSLAG is an ideal complement
AR T E de KLOKSLAG is an ideal complement Attractive market • Rising consumption of milk and cheese products is driving the demand for production capacities • Market for cheese production machines grows steadily • Extension of GEA’s product portfolio towards full solutions provider for semi-hard che
Slide 23: GEA's food exposure to grow to 75% - 80%
AR T E GEA’s food exposure to grow to 75% - 80% Sales exposure 2020: No 100% food exposure due to multi-purpose 75% - 80% food functionality of our products: Non- Food Food 23 GEA Capital Markets Day - GEA’s strategic transformation to “OneGEA” engineering for a better world
Slide 24: ARTE framework as pillars for GEA's strategy
ARTE framework as pillars for GEA’s strategy Target Footprint 2020 Applications R egions Technologies EFunctional xcellence • Exploit market • Capture global • Strengthen • Increase efficiency potential in target growth opportunities innovation and in operations and applications • Expand local techn
Slide 25: Local Emerging Markets food producers grow faster than multinationals
AR T E Local Emerging Markets food producers grow faster than multinationals Selection of local GEA customers in Emerging Markets Sales CAGR FY 2010-13 11% Local EM food producers1 1/3 of local players are not yet GEA customers1 32% GEA 68% customers 1 65 listed local food players in EM with sales >
Slide 26: GEA has still room for improvement in Emerging Markets
AR T E GEA has still room for improvement in Emerging Markets Indexation average GEA Sales/GDP per country 2011 - 20131 Russia 79 Germany = Index 100 Germany 100 USA 40 Turkey 67 China 53 Mexico 34 India 38 Vietnam 260 Colombia 23 Thailand 141 Peru 41 Indonesia 38 Brazil 54 Chile 66 South Africa 198
Slide 27: ARTE framework as pillars for GEA's strategy
ARTE framework as pillars for GEA’s strategy Target Footprint 2020 Applications R egions Technologies EFunctional xcellence • Exploit market • Capture global • Strengthen • Increase efficiency potential in target growth opportunities innovation and in operations and applications • Expand local techn
Slide 28: Continual launch of new food products creates markets for equipment
AR T E The continual market launch of new food products creates markets for innovative food processing equipment ~ 3,500 new products entered ~ 2,000 new food products p.a. the US food market in 2012 in German supermarkets alone Additionally, higher resource efficiency (e.g. power, water usage) is a
Slide 29: Innovations help clients launch new innovative products
AR T E Innovations made by GEA help industrial clients to launch new innovative products GEA Juice Freeze Innovation Concentration • Continuous process to withdraw water by freezing instead of evaporation Impact on product quality • Natural flavor can be preserved in the concentrate (e.g. juices, co
Slide 30: Innovations help clients reduce total cost of ownership
AR T E Innovations made by GEA help industrial clients to reduce total cost of ownership GEA Niro MSD™ Spray Dryer Size 4000: Innovation Up to 700 tonnes milk powder per day • Use scale-up algorithm based on computational fluid dynamics (CFD) modelling and deep process know-how to design the world’s
Slide 31: ARTE framework as pillars for GEA's strategy
ARTE framework as pillars for GEA’s strategy Target Footprint 2020 Applications R egions Technologies EFunctional xcellence • Exploit market • Capture global • Strengthen • Increase efficiency potential in target growth opportunities innovation and in operations and applications • Expand local techn
Slide 32: Current segments with diverse organizational set-up
AR T E Current segments with diverse organizational set-up Farm Technologies Mechanical Equipment Process Engineering Refrigeration Technologies BU BU BU BU BU BU BU TC TC TC …… … TC TC TC Farm Farm Milking & MSP FS HOM FLC Engin. Freezing Comp. Equipment Services Cooling SBU Solutions SBU PD/PM PD/
Slide 33: GEA will improve regional coverage and functional excellence
GEA will improve particularly with regard to regional coverage and functional excellence Target Footprint 2020 Applications Regions Technologies Functional Excellence • GEA a partner • Untapped potential • GEA perceived as • High complexity in for its customers mainly in Emerging technology leader o
Slide 34: Agenda
Agenda •1 Strategic Roadmap “GEA 2020” •2 ARTE framework as pillars for GEA’s strategy •3 Future organizational set-up “Fit for 2020” 34 GEA Capital Markets Day - GEA’s strategic transformation to “OneGEA” engineering for a better world
Slide 35: Project "Fit for 2020": From four stand-alone Segments to two Business Areas
Project “Fit for 2020”: From four stand-alone Segments to two integrated Business Areas Current Organization Future Blueprint Executive Board Executive Board FT ME RT PE Head- Equipment Solutions Global SSC quarter BA BA Corp. Center Support Support Support Support Regions Regions Regions Regions Re
Slide 36: Future organizational set-up reflects all elements of ARTE strategy
Future organizational set-up (“Fit for 2020”) reflects all elements of ARTE strategy Executive Board Applications Regions Technologies Functional Excellence Equipment Business Area Solutions Business Area Product Engineering & Development (PED) Technology Centers (TEC) Product Management & Sales (PM
Slide 37: Future setup will strengthen core cash flow generation ability
Future setup will significantly strengthen our core cash flow generation ability € Cost Savings Quantum leap on GEA € Stronger Top-line Growth Cash Flow Drivers € Streamlined Capex € Working Capital Discipline 37 GEA Capital Markets Day - GEA’s strategic transformation to “OneGEA” engineering for a
Slide 38: "Fit for 2020" Savings: Design Teams with top-down mandates
“Fit for 2020” Savings: Design Teams with top-down savings mandates Main Levers Savings Target • Functional bundling in countries General Cost & • Delayering / Increased span of control Savings Administration • Shared Service Center at least EUR • Optimized production network 100m Operations p.a. &
Slide 39: "Fit for 2020" Commitment: Savings on top of regular budget
“Fit for 2020” Commitment: Savings come fully on top of regular budget Ongoing business “Fit for 2020” New GEA Top-line Operating Operating Scenarios EBITDA-Margin Drivers Savings by 2017 EBITDA-Margin Volume growth Growth Increase Operational leverage + + EUR 100m |-1000 FTE = Slight Efficien
Slide 40: "Fit for 2020" Tracking: Project progress and savings
“Fit for 2020” Tracking: Project progress and savings closely monitored from three angles Project Tracking Measure Cost budget Actual Target Cost driver implementation compliance Delta development • Clear responsibilities • Monthly review • Steering and • Detailed milestone • Cost and FTE budgets mo
Slide 41: Design Team has been carefully screened
Design Team has been carefully screened - incentives tied to delivering on savings and operational targets Equipment BA Solutions BA E-CFO E-PED E-PMS E-SCP E-SER S-CFO S-TEC S-APC S-SER Regions and countries R-LAM R-NCE R-WE&MEA R-DACH&EE R-APC R-NAM GCC SSC G-FIN G-HR G-TAX G-IR G-IT G-LC G-CD G-C
Slide 42: Major organizational design rules for a leaner organization
Major organizational design rules to warrant a leaner and better organization A Physical design of the future organization • Span of control of new organizational units: Increase by 2 • Number of layers of the new organization: Reduction of 2 complete management levels B Saving targets – top-down gu
Slide 43: Cutting management layers is an important design deliverable
Cutting management layers is an important design deliverable for the new organization Situation today Executing “Fit for 2020” Future set-up Board: Board: 4-7 layers apart 3-5 layers apart from customers from customers Executive Board GEA taking out two complete Executive Board management layers: •
Slide 44: Implementation to begin in Q2 2015
Implementation to begin in Q2 2015 after a diligent charting process Capital Markets Milestone: Detailed plan for Day 2014 new organizational structure Detailed organizational design/blueprint (new org charts, processes, governance) Sizing of functions Preparation for Implementation and execution of
Slide 45: engineering for a better world
engi ering for a better world www.gea.com
GEA Group Aktiengesellschaft — Investor Day (October 2014) on 6ix