GEA Group Aktiengesellschaft · XETR:G1A
GEA Group Aktiengesellschaft — Non-Deal Roadshow (November 2021)
50 slides from GEA Group Aktiengesellschaft's roadshow presentation, November 2021
Slide 1: GEA's Mission 26: Accelerating Profitable Growth
D Ü S S E L D O R F, N O V E M B E R 2 0 2 1 GEA`S MISSION 26: ACCELERATING PROFITABLE GROWTH
Slide 2: Disclaimer
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 wit
Slide 3: Agenda
Agenda 1. Overview GEA 4 2. The turnaround story 14 3. Mission 26 20 4. Financial ambition 26 33 5. Q3 & Outlook 2021 41 6. GEA – a compelling investment 47 ROADSHOW PRESENTATION 3
Slide 4: GEA at a glance
GEA at a glance "Engineering for a better world" is the driving and energizing principle connecting GEA’s employees. As one of the largest systems suppliers GEA makes an important contribution to a sustainable future with its solutions and services, particularly in the food, beverage and pharmaceuti
Slide 5: Our applications – in touch with GEA everyday
Our applications – in touch with GEA everyday Dairy Farming Pharma & Refrigeration Food Beverages Chemical Marine and Processing healthcare and Heating Every third Approx. every Approx. one Approx. every Every fourth More than Each industry Every second chicken third process quarter of second liter
Slide 6: GEA's key customer industries: food & beverages & pharmaceuticals
GEA’s key customer Demand for industries Food New Food Safety & food & beverages & Quality pharmaceuticals are very stable, reliable Growing Middle and growing thanks to Class Essential and Affordable global megatrends Medicines Growing World Population Sustainable Solutions Urbanization ROADSHOW PR
Slide 7: GEA's key customer industries: stable, reliable and growing
GEA’s key customer industries Production growth Industry volatility food & beverages & [CAGR 2000-2020 in %] [Standard Deviation 2000-2020 in %] pharmaceuticals Food & Beverages 3,6% 1,0% ~72% of GEA sales are very stable, reliable Pharmaceuticals 4,8% 2,6% ~7% of GEA sales and growing thanks to Agr
Slide 8: GEA has a highly diversified customer base
GEA has a highly diversified customer base 100% Typical industrial company 80% Cumulative revenue share 60% GEA ~51% 40% ~45% ~38% 20% ~28% ~2% ~11% 0% Customers Top 1 Top 10 Top 50 Top 100 Top 150 Top 200 CAPITAL MARKETS DAY 2021 8
Slide 9: Separation & Flow Technologies
Separation & Flow Technologies Further growing from a strong base Sales share3 EBITDA share1,3 26% 48% Strategic focus • Develop New Food applications • Technological leadership • Drive top-line growth with focus on NAM, LAM and APAC ROCE1,3 Market position • Optimize cost structure and efficiency 2
Slide 10: Liquid & Powder Technologies
Liquid & Powder Technologies Well positioned to benefit from New Food growth Sales share3 EBITDA share1,3 36% 23% Strategic focus • Drive growth through development of new applications, such as New Food • Innovation in sustainable solutions • Drive profitability through continued improvement in proj
Slide 11: Food & Healthcare Technologies
Food & Healthcare Technologies Multiple niche player Sales share3 EBITDA share1,3 18% 14% Strategic focus • Develop untapped regional markets and drive growth • Increase share of service on installed base • Development in New Food with core extrusion technology ROCE1,3 Market position • Focus in-lin
Slide 12: Farm Technologies
Farm Technologies Leading technology position will drive further growth Sales share3 EBITDA share1,3 12% 11% Strategic focus • Further implementation of route-to-market strategy • Increase market share in automatic milking systems • Introduction of a new innovative automatic feeding system ROCE1,3 M
Slide 13: Heating and Refrigeration Technologies
Heating and Refrigeration Technologies Well positioned to benefit from growing heat pump demand Sales share3 EBITDA share1,3 13% 10% Strategic focus • Focus R&D resources to become technology leader in fast growing heat pump market • Leverage digitalization to maximize efficiency and availability of
Slide 14: The Turnaround Story
THE TURNAROUND STORY ROADSHOW PRESENTATION 14
Slide 15: GEA in 2019: Internal snapshot
GEA in 2019 Internal snapshot • No P&L responsibility below EB level • Lack of accountability • Financial underperformance • Limited financial transparency • Key managers leaving the company • High staff turnover + • 7 profit warnings in a row • Stable & growing markets • Leading market positions •
Slide 16: GEA in 2019: External perception
GEA in 2019 External perception € 7 Profit warnings 60 „An uninvestable stock Start new (still) in our view. That's 50 management despite halving Share price since August4th: (February 19, 2019) Oct`16 38.13whilst € the broader 40 Share price: European industrial sector (SXNP) has gained 12%.” 30 €2
Slide 17: Five key drivers contributed to the turnaround
Five key drivers contributed to the turnaround We fully delivered on what we promised at the CMD 2019 New organization Headcount 800 Portfolio pruning Global NWC optimization Increase operational efficiency NWC/Sales: • 5 divisions / 17 Business 30.06.2019-31.12.2020 7 companies sold • Establish ONE
Slide 18: GEA has achieved an impressive turnaround and is back on track
GEA has achieved an impressive turnaround EBITDA1 margin and is back on track 16% 14.8%2 14% 12.5-13.5% 13.9%2 13.4% 12.4-13.0% 12.8%2 12,4% 12% 11,4% 11,5% 11.2%2 10% 9,8% 9,8% 8% 6% 2015 2016 2017 2018 2019 2020 2021E 2022E 1 Before restructuring expenses 2 Pro forma EBITDA margin before restructu
Slide 19: We are fully on track to achieve our targets 2022
We are fully on track to achieve our targets 2022 Commitment at CMD 2019 Organic sales CAGR1 EBITDA margin1,2 NWC/Sales (2019-22E) 2.0%– 11.5%– 12.0%– 3.0% 13.5% 14.0% 2019 0.1% 2019 9.8% 2019 14.0% 2020 -2.6% 2020 11.5% 2020 7.9% 2021E 5-7% 2021E 12.4% - 13.0% 2021E 8-10% 1 Figures based on the ass
Slide 20: Mission 26
MISSION 26 ROADSHOW PRESENTATION 20
Slide 21: Mission 26: Accelerating profitable growth
Mission 26: Accelerating profitable growth 2019 2026 • Self-help measures successfully implemented • Creating the basis for profitable growth ROADSHOW PRESENTATION 21
Slide 22: Mission 26: Ambitious financial targets
Mission 26 Ambitious financial targets Organic sales CAGR1 EBITDA margin2 ROCE2,3 (2021E – 2026E) 4%-6% > 15% > 30% (FY 2021E: ~€4,650m)4 (FY 2021E: 12.4% - 13.0%) (FY 2021E: 23.0% - 26.0%) 1 Currency and portfolio adjusted 2 Before restructuring expenses; based on constant exchange rates 3 Capital
Slide 23: Engineering for a better world
Foundational elements of Mission 26 Our well-established Purpose… Engineering for a better world ROADSHOW PRESENTATION 23
Slide 24: Foundational elements of Mission 26: Our new Vision
Foundational elements of Mission 26 … and our new Vision We safeguard future generations by providing sustainable solutions for the nutrition and pharmaceutical industries ROADSHOW PRESENTATION 24
Slide 25: Mission 26: Sustainability
Mission 26: Sustainability • Comprehensive ESG strategy • Greenhouse gas emission neutral since 2021 • -60% Scope 1 & 2 CO2e emissions (by 2030) • Net zero by 2040 – interim targets validated by Science Based Targets initiative (SBTi) ROADSHOW PRESENTATION 25
Slide 26: Mission 26: Innovation & Digitalization
Mission 26: Innovation & Digitalization • Clear innovation strategy • Significant increase of R&D spend (ca. 3% of Sales by 2026) with increased allocation into projects • Bundle digital competencies under new Chief Digital Officer ROADSHOW PRESENTATION 26
Slide 27: Mission 26: New Food
Mission 26: New Food • GEA – the enabler of the New Food industry • Uniquely positioned as a complete line provider • New Food consumption to triple by 2030 • Expected increase in Order Intake from >€120m in 2021E to >€400m in 2026E CAPITAL MARKETS ROADSHOW PRESENTATION DAY 2021 27
Slide 28: Mission 26: Sales Excellence
Mission 26: Sales Excellence • Fully leverage the potential of the region & country (R&C) organization • Optimize route-to-market • Manage performance • New Machines Sales growth with organic CAGR of 4%-5% • Reduce selling expenses (target corridor of 9%-11% of Sales by 2026) ROADSHOW PRESENTATION 2
Slide 29: Mission 26: Service Excellence
Mission 26: Service Excellence • Grow installed base coverage • Taking the blueprint of best-in-class Business Units as a role model • Expand recurring revenue streams to subscription based business models • Service Sales growth with organic CAGR of 5%-6% ROADSHOW PRESENTATION 29
Slide 30: Mission 26: Operational Excellence
Mission 26: Operational Excellence • Continue transition to Nur rechts bild, nicht ueber den best-in-class procurement gesamten Bildschirm • Further optimize production footprint Neues Bild • Rollout of the factory of the future program • Overall >€150m in cost savings (€90m from procurement and €60
Slide 31: Mission 26: Acquisitions
Mission 26: Acquisitions • Actively screening market opportunities • Financial guardrails defined for value accretive transactions • Healthy balance sheet enables external growth ROADSHOW PRESENTATION 31
Slide 32: Mission 26 pillars overview
Innovation & Sales Operational Digitalization Excellence Excellence Service Sustainability New Food Excellence Acquisitions ROADSHOW PRESENTATION 32
Slide 33: Financial Ambition 26
FINANCIAL AMBITION 26 ROADSHOW PRESENTATION 33
Slide 34: Financial ambition 26 – The next level
Financial ambition 26 – THE NEXT LEVEL Sales (€m) EBITDA1 margin (€m) ROCE1 (%) CAGR 4%-6% >15% >30% ~€6.0bn ~€4.65bn2 23%-26% 12.4%-13.0% • Accelerating sales growth • Reaching new margin level • Outstanding capital return 2021E 2026E 2021E 2026E 2021E 2026E 1 Before restructuring expenses 2 Estima
Slide 35: Accelerating sales growth and driving margin to new record level
Accelerating sales growth and driving margin to new record level Sales EBITDA1 margin 5%-6% ~1.5% -~1.5% 4%-5% CAGR ~€6.0bn CAGR ~1.0% Procurement savings & sales price -~2.0% Production savings increase >15.0% Increasing share of wallet ~€4.65bn2 Better iBase penetration ~2.0% Σ€60m Σ€90m Launching
Slide 36: The next level: EBITDA margin targets 2026
THE NEXT LEVEL EBITDA1 margin targets 2026 Sales CAGR2 EBITDA1 margin 4.0% - 6.0% >15.0% 5.5% - 6.5% 14.0% - 16.0% 5.0% - 6.0% 12.0% - 14.0% 4.0% - 5.0% 10.0% - 12.0% 4.0% - 5.0% 13.0% - 15.0% 4.0% - 5.0% 24.0% - 26.0% 1 Before restructuring expenses; 2 2021E – 2026E ROADSHOW PRESENTATION 36
Slide 37: Strong free cash-flow generation
Strong free cash-flow generation … Free Cash-Flow (€m) • Stable net working capital to ~2,000 sales ratio 8%-10% 626 • Disciplined Capital Expenditure: about €200m per year until 2026 • Strong free cash-flow generation 342 of ca. €2.0bn until 2026 2019 2020 2021E 2022E 2023E 2024E 2025E 2026E ROADSH
Slide 38: Allows for attractive shareholder returns
… allows for attractive shareholder returns … Capital Allocation (2022E-26E) Share buyback program ca. €170m (€300m in total) Attractive dividend payouts Shareholders will benefit from sustainable dividend increases Net cash position Used efficiently while committed to investment grade rating ROADSH
Slide 39: … and for external growth
… and for external growth Strategic M&A Guardrails Financial Imperatives – Strengthening application portfolio – Best owner / operator of assets – Enhancing service business – Leveraging synergies – Filling white spots – Value accretive – Access to adjacent / new technologies – Enabling sustainable
Slide 40: Significant shareholder value creation until 2026 and beyond
Significant shareholder value creation Shareholders will benefit until 2026 and beyond from sustainable dividend Dividend payout2 (€m) increases Dividend per share (€) >0.85 0.30 0.40 0.55 0.55 0.60 0.70 0.80 0.80 0.85 0.85 0.85 0.85 STOXX TMI +62.0% +57.0% GEA TSR1 154 153 153 153 153 153 MDAX 135
Slide 41: Q3 & Outlook 2021
Q3 & OUTLOOK 2021 ROADSHOW PRESENTATION 41
Slide 42: Executive Summary Q3 21
Executive €m Q3 21 Q3 20 ∆ Summary Q3 21 Order Intake 1,350 1,055 Four large orders (>€15m) totaling 27.9% €167m vs. two large orders in Q3 20 of Fifth consecutive quarter in total €37m with growing order intake Sales 1,199 1,146 4.7% Organic sales grew by 6.0% YoY EBITDA1 169.9 145.3 16.9% EBITDA1
Slide 43: Key developments Q3 2021
Key developments Q3 2021 • Start of our “Mission 26”: sustainable and profitable growth in combination with a comprehensive ESG strategy • Signed one of the largest orders ever in the growing “New Food” market • Portfolio pruning process almost completed • Refocused and rebranded Refrigeration Techn
Slide 44: Share buyback of €300m until end of 2022
Share buyback of €300m (ca. 4.4%1) until end of 2022 Status as per Q3 2021 €40m Cash spent Number of 1,008,931 shares 0.6% of outstanding shares Average €39.64 price paid 1 Of outstanding shares on August 12, 2021; calculation based on the XETRA closing price of the GEA share on August 12, 2021 ROAD
Slide 45: Guidance FY 2021 confirmed
Guidance FY 2021 confirmed Organic sales EBITDA1 ROCE1 (currency and portfolio adjusted) (Before restructuring expenses) (Before restructuring expenses) % YoY €m % 5.0 – 7.0 600 – 630 23.0 – 26.0 (PY: €4,635m) (PY: €532m) (PY: 17.1%) 1 Based on constant exchange rates | For our updated divisional gu
Slide 46: Supply chain shortages and cost increases
Supply chain shortages Continued pro-active − Recognized at steel, wood, semiconductors & electrical components approach with key − Pro-active mitigation for most input materials for 2021 with frame contracts and safety stock suppliers and own counter measures to Material & energy costs − Price incr
Slide 47: GEA - A Compelling Investment
GEA - A COMPELLING INVESTMENT ROADSHOW PRESENTATION 47
Slide 48: Shift from self-help measures to profitable growth
Shift from self-help measures to profitable growth Service New Food Excellence Sustainability Innovation & Digitalization Accelerating Growth & New organization Profitability Acquisitions Headcount 800 Increase Operational Sales operational Excellence Excellence efficiency Self-help measures Global
Slide 49: GEA – a compelling investment
GEA – a compelling investment Leading positions in attractive and growing Food, Beverages and Pharma markets Well positioned to capture growth opportunities in New Food Technological leadership Strong commitment to sustainability Clear plan for profitable growth Strong cash generation allows sustain
Slide 50: Engineering for a better world
| Engineering for a better world.
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