2015 04 16 %20agm%20gea%20group%20presentation%20of%20ceo tcm11 25383

GEA Group Aktiengesellschaft

Oberhausen, April 16, 2015

Check against delivery.

Annual General Meeting Fiscal Year 2014

engineering for a better world

Agenda

2 Annual General Meeting Fiscal Year 2014

1 Highlights FY 2014

2 Financial Year 2014

3 Agenda

5 Outlook FY 2015

4 GEA 2020


GEA achieved FY 2014 targets


Revenue (EURm)

Operating EBITDA (EURm)

Cash Flow Driver (EURm)

414 406

GJ 2013 GJ 2014

530 596 591

-5

FY 2013 organicchange

FY 2014adjusted

FX effect FY 2014reported

D +5,6%

9.6% 9.0%

4,320 4,562 4,516

-47

FY 2013 organicchange

FY 2014adjusted

FX effect FY 2014reported

D +12%

Organic sales growth:

approximately 5%

Target

Operating EBITDA:

EUR 550-590m

Target

Cash Flow Driver

Margin: 9.0% - 9.5%

Target


Highlights 2014 (1/2)


• Organic sales growth +5.6% yoy

• Operating margins at new record levels

Strong Operating Results

• Turn from net debt position in 2013 into net cash position of EUR 900m

• Debt reduction of around EUR 500m until end of January 2015

• Improvement of credit rating to now “Baa2” (Moody’s) and “BBB” (Fitch), both with “stable outlook”

Sound Improvement of Financial Situation

• Change in dividend policy by raising payout ratio to a range of 40% to 50% of net income

• Priority on bolt-on M&A following clear criteria and strategic vision

New Capital Allocation Plans


Highlights 2014 (2/2)


• GEA to be the first choice for our customers in the relevant industry

• Sales exposure 2020: 75% to 80% coming from Food Industry

• 4% to 6% CAGR organic sales growth (FY 2014 – FY 2020)

• 13% to 16% Operating EBIT-Margin (FY 2017 – FY 2020)

Strategy “GEA 2020” with clear growth and profitability targets

• Purchase agreement signed in April 2014 with economic effect to January 1, 2014

• Based on Enterprise Value of approx. EUR 1.3bn (around 11x EV/EBIT)

• Conclusion of sale in October 2014

• Cash proceeds of approx. EUR 1.1bn

Sale of Segment Heat Exchangers concluded

• Cost savings of at least EUR 100m p.a.

• New organizational set-up offers further potential to increase efficiency

Future organizational set-up “Fit for 2020”


Agenda




3 Agenda

5 Outlook FY 2015

4 GEA 2020


Revenue*


(EUR million)

4,320 4,516

2013 2014

D +4.5%

* only continued operations

Organic revenue growth +5.6%

All segments on record level



Revenue* by customer industry


14%

24%

22%

12%

12%

16%

Dairy Farming

Dairy Processing

Food

Beverages

Pharma/Chemical

Other Industries

Revenue 2014

EUR 4,516 million

Food and

Beverages:

72%

Others:

28%


Regional revenue1 split


37%

25%

17%

8%

6%

3% 3%

Western Europe

Asia/Pacific

North America

Eastern Europe

Latin America

Middle East

Africa

Revenue 2014

4,516 Mio. EUR

Emerging markets2

exposure:

37% D abs. org.: -3%*)

Top-3-Countries

1 only continued operations; 2 according to the definition of emerging/developing economies by International Monetary Funddenen 17 für GEA relevant sind

China

9% D abs. org.: -2%

USA

16% D abs. org.: +6%

Germany

9% D abs. org.: +12%


Development service business*


1,153 1,225

2013 2014

D +6.3%


Change in service revenue FY 2014 yoy: +7.6% (organic) to a total of EUR 1,225 million

Share of service revenue FY 2014: 27.1% (2013: 26.7%)

(EUR million)


Operating EBITDA*


(EUR million)

530 591

2013 2014

D +11.4%

* only continued operations and before purchase price allocation and non-recurring items

Improvement of 11.4% particularly due to volume effects and efficiency increase

Very strong growth at GEA Farm Technologies and GEA Refrigeration Technologies


Development operating EBITDA-Margin1


2,963 3,828 4,142 4,320

4,516

10.5%

12.3% 11.9% 12.3% 13.1%

0%

2%

4%

6%

8%

10%

12%

14%

0

1.000

2.000

3.000

4.000

5.000

6.000

2010 2011 2012 2013 2014

Revenue Operating EBITDA-Margin

2

1 only continued operations; 2 before purchase price allocation and restructuring; 3 before purchase price allocation ; 4 before purchase price allocation and non-recurring items

(EUR million) (% of Revenue)

3 4 4 4

6,000

5,000

4,000

3,000

2,000

1,000


Cash Flow Driver Development*


(EUR million)


GEA has a strong focus on liquidity generation

Cash Flow Driver to revenue: 9.0% - before non-recurring items 10.1%

540

405

-94

-41

Cash Flow

Driver

Δ average

Working Capital

Capex EBITDA

engineering for a better world 14 Annual General Meeting Fiscal Year 2014

Net Liquidity Reconciliation

1 Net after payment of transaction costs; 2 Including fixed deposits with a remaining period ≤ 1 year (EUR 200 million)

Net Cash 12/31/2014 2

Proceeds from Proceeds from HX-Sale 1

Dividend (Div)

Delta Working Capital

EBITDA

Net Debt 31.12.2013 w/o HX

Elimination Net Cash Position HX

Net Debt 12/31/2013 incl. HX

Net Cash bef. DOP, M&A and Dividend

Discontinued Operations (DOP)

Capex

Effects from Acquisitions (M&A)

Taxes / Interests / Others

D +324

Cash generation LTM: EUR ~324m (EUR million)

903.7

1,030.1

-115.5

-13.1

35.9

-58.9

-93.8

-109.3

-287.8

-63.4

-33.7

539.9

-178.6


Comparison of net assets (2014 vs. 2013)*

* Amounts adjusted due to first time classification of a business area as discontinued operation and due to change in accounting policy for employee benefits

1,606

6

3,887 3,117

2,578 2,715

01.01.2013 01.01.2014

Non-current assets

Current assets

Of which assets

held for sale

6,465 5,832

Equity

Current liabilities

Of which debts held for

sale

6,465 5,832

Non-current

liabilities

(EUR million) (EUR million)

620 0

2,293 1,746

1,856 1,558

2,316 2,527

01.01.2013 01.01.2014 12/31/2013 12/31/2013 12/31/2014 12/31/2014

Assets Equity and liabilites


Development Equity and Goodwill ratio


(in %)

1,868 2,164 2,167 2,316 2,527

36,3% 34.8% 33.7% 35.8% 43.3%

74.7% 69.1% 66.5%

98.1% 99.5% 100.0%

0%

20%

40%

60%

80%

100%

0

1.000

2.000

3.000

2010 2011 2012 2013 2014

Equity Equity ratio

Goodwill +/- deferred taxes to equity (HX in DOP) Goodwill +/- deferred taxes to equity (incl. HX)

3,000

2,000

1,000

(EUR million) Heat Exchangers reported

under discontinued operations


Employees1 by regions


62% 18%

11% 4% 2%

2%

0%

Western Europe

Asia/Pacific

North America

Eastern Europe

Latin America

Middle East

Africa

Employees

2014

18,243

+3%

Top-3-Countries

USA

1,569

China

1,552

Germany

5,868

* Full-time equivalents (only consolidated entities and continued operations) as of reporting date, excluding vocational trainees and inactive employment contracts


GEA Share 2014 appreciably better than benchmark

Dez. Jan. Feb. Mrz. Apr. Mai. Jun. Jul. Aug. Sep. Okt. Nov. Dez. Jan. Feb. Mrz.

80%

90%

100%

110%

120%

130%

140%

GEA Group MDAX STOXX Europe TMI Industrial Engineering

2014 2015

Total Shareholder Return (TSR) 2014 at +8%

Feb Jan Mar Apr May Jun Jul Aug Sep Oct Nov Dec Feb Jan Mar Dec


GEA* vs. STOXX® Europe TMI Industrial Engineering

* Balance sheet date (12/31/2014)

Market capitalization Market capitalization incl. dividends

Last 3 months percentage points +6 +6






Dividend payments1 and proposal

36.8

73.5 55.4

73.7

101.1 105.9 115.5

134.7

0.20

0.40

0.30

0.40

0.55 0.55 0.60

0.70

0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0

20

40

60

80

100

120

140

160

2008 2009 2010 2011 2012 2013 2014 2015

#REF! #REF!

2

1 Dividend payments respectively for the preceding fiscal year; 2 On basis of dividend proposal

(EUR million) (in EUR)

0.7

0.6

0.5

0.4

0.3

0.2

0.1


Agenda




3 Agenda

5 Outlook FY 2015

4 GEA 2020


Annual General Meeting: Agenda (1/2)


1. Annual Financial Statements, Management Report & Report of the Supervisory Board

2. Appropriation of Net Earnings

3. Ratification of the Acts of the Executive Board in the 2013 Fiscal Year

4. Ratification of the Acts of the Supervisory Board in the 2013 Fiscal Year

5. Election of the Auditor for the 2014 Fiscal Year


9. Authorization to acquire and use treasury stock as well as exclusion of the right to tender and of the subscription right

7. Creation of a new Authorized Capital III granting authorization to exclude shareholders‘ subscription rights and corresponding amendment to the Articles of Association

8. Resolution on the authorization to issue convertible or warrant bonds, profit participation rights or income bonds, the creation of contingent capital as well as the respective amendment to the Articles of Association while simultaneously cancelling the respective authorization given in 2010 and the contingent capital in accordance with s. 4 para. 5 of the Articles of Association

Annual General Meeting: Agenda (2/2)

Annual General Meeting Fiscal Year 2014 23

6. Cancellation of Authorized Capital II in accordance with s. 4 para. 4 of the Articles of Association, creation of a new Authorized Capital II and authorization to decide on the exclusion of shareholders‘ subscription rights, and the corresponding amendment to s. 4 para. 4 of the Articles of Association


Agenda




3 Agenda

5 Outlook FY 2015

4 GEA 2020


GEA is a global leader in equipment and process technology providing innovative solutions

for smart food processing and for a more efficient use of energy resources.

GEA in summary (1/2)


Dairy Farming Dairy Processing Beverages Food

Revenue

EUR 4.5bn (FY14)

SALES

Operating EBIT Margin

11.4% (FY14)

Employees

>18,000 (Dec14)

Market Cap

>EUR 9.0bn (Apr15)


You are in touch with food processed by GEA equipment every day…

GEA in summary (2/2)


…we are all this and more every day!

Every 4th liter

of milk you are

consuming has been

processed through

GEA equipment.

Every 3rd instant

coffee production

line around the globe

has been built by

GEA.

Every 3rd chicken

nugget you are

eating has been

processed by our

equipment.


GEA successfully accomplished former reorganizations


1 mg acquired GEA in 1999; 2 mg and GEA merged in 2005 for legal and tax reasons; 3 the portfolio of GEA Group 2009 was similar to pre 1999 GEA “old”

2003 – 2004 Focus on engineering

2006 – 2008 Focus on specialty

mechanical engineering

2009 – 2010 Bundling Business in

Segments by Technology

GEA Group3

FS

-Segm

ent

FT

-Se

gm

en

t

HX

-Se

gm

en

t

PE

-Se

gm

en

t

ME

-Se

gm

en

t

RT

-Se

gm

en

t

mg technologies1

mg

en

gin

ee

rin

g

mg c

hem

ical

gro

up

GEA Group2

A-D

ivis

ion

R-D

ivis

ion

C-D

ivis

ion

M-D

ivis

ion

D-D

ivis

ion

E-D

ivis

ion

H-D

ivis

ion

P-D

ivis

ion

B-D

ivis

ion

Pla

nt

Eng.

Oth

er

firm

s

• Divestiture of

mg chemical group

• Dynamit Nobel

• solvadis

• Reorganization into 5 distinct

segments and 31 business units

• Elimination of overlaps

• Divestiture of Plant Engineering

and Closure of Zinc Smelter

• Lurgi

• Lurgi Lentjes

• Zimmer

• RuhrZink


Where are we

driving GEA?

The steps of GEA’s strategic transformation

Divestment of HX Segment


With which core

businesses?

With focus on

which growth

areas?

In which efficient

organizational

setup?

2012

GEA long-term

strategic

direction

2012 -2013

GEA strategic

portfolio review

2013

“GEA 2020”

target footprint

2014: Concept

2015: Implementation

“Fit for 2020”

reorganization


GEA’s long-term strategic direction


Pursue clear technology and market leadership

Further develop food processing focus and solutions for demanding

production processes

Become global by getting closer to our customers

Use of portfolio management as tool to leverage strengths and allocate resources

Build an organization and capabilities to support strategic vision

Drive sustainable value creation


GEA wants to serve markets with these criteria


Customer industry willing to

pay a premium for process

quality and reliability

Limited project risk profile,

maximum project duration

up to 2 years

Scope of supply limited

to elements directly

controllable by us


Source: Frankfurter Allgemeine Zeitung (06/26/2014)

~ 3,500 new products p.a. entering

the US food market

~ 2,000 new food products p.a.

in German supermarkets alone

Continuous launch of new products to stimulate demand


Additionally, higher resource efficiency (e.g. power, water usage) is a major

competitive advantage for an equipment supplier


Our vision “GEA 2020”: Be the first choice of customers


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 defines our strategy how to reach

the target footprint “GEA 2020”

GEA to become


ARTE framework as pillars for GEA’s strategy

Regions Technologies Functional Excellence

• Exploit market

potential in target

applications

• Align GEA-wide

application strategy

and customer

approach

• Capture global

growth opportunities

• Expand local

presence

• Coordinate regional

approaches across

GEA

• Strengthen

innovation and

technological

leadership

• Foster cross-

business colla-

boration in R&D

• Increase efficiency

in operations and

support functions

• Reduce

organizational

complexity

Target Footprint 2020

Applications

• Exploit market

potential in target

applications

• Align GEA-wide

application strategy

and customer

approach



Applications in line with customer industries


A R T E

Other Industries Pharma Chemical

Beverages Dairy Processing Dairy Farming Food


Regions & Countries: Global coverage ensured


R-APAC

R-NAM

R-DACH&EE

R-NCE

R-LAM

R-WE&MEA

Cluster Clustered

White spot

R T E A


Technologies and Innovations


A R T E


From Segments to two integrated Business Areas


Current Organization Future Blueprint

Executive Board Executive Board

Head-

quarter FT

Regions

Support

ME

Regions

Support

RT

Regions

Support

PE

Regions

Support

Global Corp.

Center

SSC Equipment BA

Solutions BA

Regions / Countries

• Stand-alone effective Segments driving own

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

A R T E


Excellent leadership team



Agenda




3 Agenda

5 Outlook FY 2015

4 GEA 2020


Anuga FoodTec 2015

• Two Dairy Technology Awards

GEAs ecoforce decanter family

GEA Provident Flow Analysis

• Gold medal International Foodtec

GEA MultiDrum


GEA and SAP collaborate in Industry 4.0 project

• Condition monitoring of machines

• Predictive maintenance, to better plan timing of service

• Introduced on CeBIT 2015

Customer


Fully automatic milking stall module

• Milking stall module – all components integrated in module located beside every cow

• Particularly user friendly service module

• Optimization of milk transport

• Dipping function for best hygiene


Provided that there is no decline in global economic growth and a constant currency

basis compared to FY 2014, and without taking into account the impact of acquisitions

and one-off effects, we are aiming in FY 2015 for:

Guidance FY 2015


Sales

moderate organic

growth

Operating EBITDA

(EURm)

580 - 620

Cash Flow Driver Margin

9.0% - 9.5%

This forecast does not yet take into account first savings generated in connection with the

reorganization of the Group. Against this backdrop, GEA will submit a more detailed outlook on the

Company’s business progress together with the first quarter report on May 11, 2015.


Sales

&

Service

Operations

&

Engineering

General

&

Administration

“Fit for 2020” Saving Targets updated

• Functional bundling in countries

• Delayering/Increased span of control

• Shared Service Center

• Optimized production network

• Leverage outsourcing

• Increase span of control

• Delayering/Increased span of control

• Sales effectiveness & synergies

• Bundling of after sales

Main Levers Saving Target


Cost

Savings

at least

EUR

100m p.a.

Personnel

approx.

1,000 FTE

Updated

Saving Target

Cost

Savings

at least

EUR

125m p.a.

Personnel

approx.

1,450 FTE


951 999

Q1 2014 Q1 2015

Preliminary Order Intake* and Revenue* Q1 2015


1,024 1,113

Q1 2014 Q1 2015

Book-to-bill ratio 1.1

Order Intake Revenue

BA E BA E BA E BA E

BA S BA S BA S BA S


(EUR million)

D +8.7%

Organic:

D 2.7 %

D +5.1%

Organic:

D -1,6 %


Financial Calendar


2 0 1 5 May 11, 2015 Interim Report Q1 2015 Düsseldorf

Jul 29, 2015 Interim Report Q2 2015 Düsseldorf

Oct 27, 2015 Interim Report Q3 2015 Düsseldorf


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 that could cause such a divergence include 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. We are under no obligation to update forward-looking statements.

Disclaimer

2015 04 16 %20agm%20gea%20group%20presentation%20of%20ceo tcm11 25383

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