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GEA Group
Niels Graugaard, Member of GEA Executive Board
Capital Markets Day, June 29 – 30 2011, Bakel
The Importance of Food Industry for GEA
efficiency in food and energy processes.
Disclaimer
2
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.
GEA Capital Markets Day June 29-30, 2011, Niels Graugaard
efficiency in food and energy processes.GEA Capital Markets Day June 29-30, 2011, Niels Graugaard
Agenda
Growth Drivers for the Food Industry
GEA’s Exposure to the Food Industry
3
Demographics
Trends in Consumer Behavior
Food Market Environment
Food Equipment Market
GEA’s Performance related to Food
efficiency in food and energy processes.
Growth Drivers – Food and Energy
4
Growing interest in efficient production processes that conserve resources
Resource-conserving technologies/dry cooling
Energy-saving machines and processes/heat recovery
“Intelligent” engineeringsolutions
Steady growth in global population
Continuously rising demand for food and energy
Megatrend Significance for demand Demand relevant for GEA
Volume growth and catch-up potential especially in South and East Asia, Latin America and, in future, Africa
Urbanization/expansion ofmiddle class
Growing quality requirements for foodstuffs and pharmaceuticals
Processed foods/ready meals
Aseptic filling/enriched lifestyle drinks
Pharmaceuticals
Rising energy costs/ environmental regulations
GEA Capital Markets Day June 29-30, 2011, Niels Graugaard
efficiency in food and energy processes.5 GEA Capital Markets Day June 29-30, 2011, Niels Graugaard
Top 10 Countries …with the Largest Population Growth until 2020
GEA benefits mainly from population growth in more afflue nt countries, which demand more processed and convenience food.
Source: GEA analysis with raw data from Wikipedia. Bubble size indicates the absolute increase in population from 2010 to 2020.
Siz
e
Richness
India China
Ethiopia
United States
Nigeria
Pakistan
Bangladesh
Indonesia
Brazil
Philippines
10.000
100.000
1.000.000
10.000.000
100 1.000 10.000
Pop
ulat
ion
2010
in T
hous
and
(log
scal
e)
GDP per Capita in USD (log scale)
III
efficiency in food and energy processes.
6,87,6
2009 2020
3,5
4,4
2009 2020
1,3
2,2
2009 2020
GEA Capital Markets Day June 29-30, 2011, Niels Graugaard
Food Habit Change driven by Urbanization
+1.0 %
+2.1 %+4.9%
Source: Division of the Department of Economic and Social Affairs of the United Nations Secretariat: World Bank Development indicators.
+0.8 BillionWorld Population
+0.9 BillionUrbanization
+0.9 BillionMiddle Class
6
CAGR in %
In Billion
efficiency in food and energy processes.GEA Capital Markets Day June 29-30, 2011, Niels Graugaard
Agenda
Growth Drivers for the Food Industry
GEA’s Exposure to the Food Industry
7
Demographics
Trends in Consumer Behavior
Food Market Environment
Food Equipment Market
GEA’s Performance related to Food
efficiency in food and energy processes.
Trends in Consumer Behavior regarding Food
Source: UN, Rabobank.
GEA Capital Markets Day June 29-30, 2011, Niels Graugaard8
Changing eating habits lead to growing demand in1. Functional food, 2. Processed and prepared food, especially meat, and3. Convenience food.
efficiency in food and energy processes.
Our mission is to bring health through food to as many people as possible.
… the world's leading Nutrition, Health and Wellnesscompany.
GEA Capital Markets Day June 29-30, 2011, Niels Graugaard
“The creation of the Global Nutrition Group is part of our long-term strategy to grow our nutrition businesses from about $10 billion in revenues today to $30 billion by 2020” said PepsiCo Chairman and CEO Indra Nooyi
Source: Danone, Nestle, PepsiCo.
9
Consumer Trend 1: Functional Food
Functional Foodare food and drink products making a specific health claim.
DANONE:
NESTLE:
PEPSICO:
efficiency in food and energy processes.GEA Capital Markets Day June 29-30, 2011, Niels Graugaard
Digestive Health• Pro-biotic• Fiber enhanced
Energy Drinks• Energy• Convenience Package
Bones and Movement• Calcium added• Movement supportive
Functional FoodMajor Claims
10
efficiency in food and energy processes.
Functional FoodCurrent Situation and Growth Potential
GEA Capital Markets Day June 29-30, 2011, Niels Graugaard
Source: Leatherhead Food Research.
11
38%
23%
12%
8%
7%
6%6%
Functional Food Categories
ProjectedMarket Size
2014$ 30 bn
Dairy
Bakery and Cereal
OthersSoy Products
47%
31%29%
39%
Japan US Europe World
Growth Rate 2006-2010
Beverages
Meat, Fatand Oils
Fish andEggs
Projected Growth Rate2011-2014: 23%
Mainly driven by demand in India, China, Latin America and the Asia-Pacific.
efficiency in food and energy processes.GEA Capital Markets Day June 29-30, 2011, Niels Graugaard
0%
10%
20%
30%
40%
50%
60%
70%
0 10 20 30 40 50 60 70 80 90
Smaller base but fast growing – 20% p.a. in 2007-10
Total meat volume (B kg)
China
Strong growth expected, predominantly driven by retail/fast food growth
Germany
Mature markets with high % processed
US
Western Europe (excl. Germany)
Russia
Emerging Asia
Rest of World
Central/ South America
Brazil
Developed Asia
Eastern Europe (excl. Russia)
2010 % processed meat* out of all meat production
Source: FAPRI, FAO; GEA; Strategic Analytics. *Defined as heavily processed (sausage, ham, bacon, burger, meal components and ready meals).
12
Consumer Trend 2: Processed Protein Products
efficiency in food and energy processes.
10.970
4.800
714
2.823
1.101
1.532
8.179
3.344
536
2.269
827
1.202
Total
Asia Pacific
Middle East
Europe
Latin America
North America
Sales of machinery and equipment (mUSD)Primary and secondary processing
2009
2015
Increasing Demand in Processed Meat & PoultryLeads to Growth in Food Equipment Sales
+5.0%
* Nominal growth; Source: Global Industry Analysts, 2008: “Food Processing Machinery & Equipment”
+4.1%
+4.9%
+3.7%
+4.9%
+6.2%
CAGR*
GEA Capital Markets Day June 29-30, 2011, Niels Graugaard13
efficiency in food and energy processes.
2.975
1.648
140
538
233
417
2.261
1.151
114
459
189
347
Total
Asia Pacific
Middle East
Europe
Latin America
North America
Sales of machinery and equipment (mUSD)Primary and secondary processing
2009
2015
+4.7%
+3.1%
+3.5%
+2.7%
+3.5%
+6.2%
CAGR*
* Nominal growth; Source: Global Industry Analysts, 2008: “Food Processing Machinery & Equipment”
GEA Capital Markets Day June 29-30, 2011, Niels Graugaard
Increasing Demand in Processed Fish and SeafoodLeads to Growth in Food Equipment Sales
14
efficiency in food and energy processes.
Ready-to-Eat• Fresh• Meals• Snacks
Ready-to-Heat Frozen Food
Ready-to-Cook
Consumer Trend 3: Convenience Food
Source: Swiss Association for Nutrition .
GEA Capital Markets Day June 29-30, 2011, Niels Graugaard15
efficiency in food and energy processes.GEA Capital Markets Day June 29-30, 2011, Niels Graugaard
Agenda
Growth Drivers for the Food Industry
GEA’s Exposure to the Food Industry
16
Demographics
Trends in Consumer Behavior
Food Market Environment
Food Equipment Market
GEA’s Performance related to Food
efficiency in food and energy processes.
Food Market EnvironmentFood Safety
Food Safety – move to zero tolerance• Current issues:
• EHEC• Chinese food scandals
• Stringent food safety legislation• Biggest business and reputational risk for food Industry
GEA Capital Markets Day June 29-30, 2011, Niels Graugaard17
Source: Grant Thornton 2011 Manufacturing Trends Survey.
Global Manufacturing Priorities for 2011
Promotion posterof HACCP
(Hazard Analysis and Critical
Control Point) in Hong Kong.
efficiency in food and energy processes.
Chinese Food Scandals• Melamine-tainted milk• Toxic bean-sprouts • ‘Cadmium’ rice• Use of the steroid clenbuterol in pork production• Milk with leather-hydrolyzed protein• “Avatar” meat contaminated by a phosphorescent bacteria
Consumers‘ Need for Food Hygiene and Safety• Regulatory : Chinese Vice Premier urges adopting strict and harsh
punishments for food safety violations in order to deter violations in the most effective manner.
Food Market EnvironmentChina‘s Pledge on Food Safety
Source: http://www.telegraph.co.uk/news/worldnews/asia/china/8476080/Top-10-Chinese-Food-Scandals.html
GEA Capital Markets Day June 29-30, 2011, Niels Graugaard18
=> Opportunities for GEA: to serve local and international players in China fromthe food industry with food processing machines that provide high standards of hygiene and security .
efficiency in food and energy processes.19 GEA Capital Markets Day June 29-30, 2011, Niels Graugaard
Big players have to build up ownfarms in China
Full solutionsupplier for milk
farmers
Food Market Environment GEA Benefits from Chinese Dairy Market
Producers have to buy milk fromafar and transport
Avanced coolingtechnologies fortrucks and fleets
Chinese dairy market[in bn $]
Source: http://www.dairyreporter.com/Markets/Fonterra-faces-big-challenges-ahead-in-China/; http://www.geagroup.com/en/news/20110309-00477.html
Opp
ortu
nity
Sol
utio
n
22
70
2009 2020
Cha
lleng
e
Consumers‘ concern about milk quality and safety
Full scopesupplier withhigh hygienic
and safetystandards
+
efficiency in food and energy processes.
Food Market Environment Stable Capex despite Food Price Volatility
GEA Capital Markets Day June 29-30, 2011, Niels Graugaard20
100
120
140
160
180
200
220
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
%[EUR Million]
Food Price Index** Rolling Capex*
Source: Citi Investment Research. * Capex Model based on >70 manufacturers. ** Food Price Index: 2000-2004 = 100.
Food Price Index consists of the average of 5 commodity group price indices (meat, dairy, cereals, oil & fat, and sugar) weighted with the average export shares of each of the groups for 2002-2004.
Strategies of Food Manufacturers facing Commodity Inflat ion• Aggresive cost management• Demand for energy efficient solutions
Rol
ling
Cap
ex*
Food P
rice Index**
efficiency in food and energy processes.GEA Capital Markets Day June 29-30, 2011, Niels Graugaard
Agenda
Growth Drivers for the Food Industry
GEA’s Exposure to the Food Industry
21
Demographics
Trends in Consumer Behavior
Food Market Environment
Food Equipment Market
GEA’s Performance related to Food
efficiency in food and energy processes.
Food & Beverage – Long-term Growth
GEA Capital Markets Day June 29-30, 2011, Niels Graugaard22
• Worldwide population and GDP growth
• Urbanization leading to different food and eating habits
• Growing demand for convenience food
• Increasing wealth leading to more spending on food
• Multi-national and large domestic food manufacturers favoring high level, full scope suppliers of internationally uniform quality
• Efficiency improvements expected
• Stricter hygienic standards and regulations
• Demand for low cost of ownership to cope with increasing input costs in production
Growth DriversImplication for Equipment
Suppliers (like GEA)
=> GEA Group is a full scope supplier offering its customers energy efficient innovations and solutions
GEA as FullScope Supplier
efficiency in food and energy processes.
Sector Application GEA profile CFS profile Profile GEA + CFS
Milk Production Strong Strong
Drinking Milk Strong Strong
Yogurt, Sour Milk Drinks (…) Strong Strong
Cheese Active Active Active
Butter Strong Strong
Ice Cream Active Active
Milk Powder / Whey Powder Strong Strong
Baby Food (milk formula) Strong Strong
Dairy Ingredients (whey, lactose, casein) Strong Strong
Fruits & Vegetables Juice Strong Strong
Soft Drinks (Carbonated) Active Active
Bottled Water Active Active
Coffee / Tee (instant) Strong Strong
Beer Strong Strong
Wine Active Active
Spirits Active Active
Meat / Poultry / Animal Protein Inactive Strong Strong
Fish / Shrimp / Animal Protein Inactive Strong Strong
Fruits / Vegetables Inactive Active Active
Bakery / Dough Inactive Inactive
Confectionary Inactive Active Active
Convenience Food Active Active Strong
Baby Food (non-milk formula) Active Active
Animal Fats Strong Strong
Edible Oils Strong Strong
Starch Strong Strong
Sugar Strong Active Strong
Other Food Ingredients Active Active
Food & Beverage
Dairy
Liquid
Solid
GEA’s Acquisition of CFSCFS is Filling a Gap for GEA
GEA Capital Markets Day June 29-30, 2011, Niels Graugaard23
efficiency in food and energy processes.GEA Capital Markets Day June 29-30, 2011, Niels Graugaard24
Examples of technology
GEA Freezing Tunnels
GEA Milk Production
GEA Spray Dryers
GEA Separators
GEA Plate Heat Exchangers
GEA Valves
GEA Spiral Cookers
heat
cool/freeze
separate
dry / dewater
distill
pump
dose
agglomerate
package
Foodstuff
prepare
marinate
process
slice
GEA’s Food Equipment ApplicationsFull Scope Supplier
GEA FT
GEA PE
GEA HX
GEA MEGEA RT
GEA ME
GEA CT
efficiency in food and energy processes.GEA Capital Markets Day June 29-30, 2011, Niels Graugaard
Agenda
Growth Drivers for the Food Industry
GEA’s Exposure to the Food Industry
25
Demographics
Trends in Consumer Behavior
Food Market Environment
Food Equipment Market
GEA’s Performance related to Food
efficiency in food and energy processes.
German Machinery IndustryFood Equipment less Volatile
Source: VDMA
GEA Capital Markets Day June 29-30, 2011, Niels Graugaard26
Order intake of food and packaging equipments is less volat ile than other branches in times of economic slowdown.
Index rolling average 2005=100.
In real terms, seasonally adjusted, smoothed.
efficiency in food and energy processes.27 GEA Capital Markets Day June 29-30, 2011, Niels Graugaard
0
1.000
2.000
3.000
4.000
5.000
6.000
Jun-10 Sep-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11
Other Industries
Marine
Pharma
Chemicals
Climate &Environment
Oil & Gas
Power
Food - Solid
Food - Beverage
Food - Dairy
[in EUR million]Strong and consistent growth driver is the order intake fr om
the food industry
Rolling Last 4 QuartersRolling Last 12 Months
+70%
+23%
-19%
+24%
+13%
+9%
+41%
* Rolling last 4 quarters until December 2010. Afterwards rolling last 12 months.
+36%
+16%
+24%
∆ June 2010
(LTM) to May 2011 (LTM)
GEA’s Rolling Order Intake by Customer Industry
efficiency in food and energy processes.
0
500
1.000
1.500
2.000
2.500
Jun-10 Sep-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11
Asia-Pacific
Eastern Europe &CIS
North America
Latin America
Middle-East
Africa
Western Europe
[in EUR million]
GEA Capital Markets Day June 29-30, 2011, Niels Graugaard28
+29%
+73%
+83%
+40%
+34%
+68%
+2%
* Rolling last 4 quarters until December 2010. Afterwards rolling last 12 months. ** Incl. Solid, Beverage and Dairy.
Order intake development from Asia-Pacific supporting t heoverall order intake coming from the food industry
GEA’s Rolling Order Intake from Food Industry**Regional split since June 2010*
∆ June 2010
(LTM) to May 2011 (LTM)
Rolling Last 4 QuartersRolling Last 12 Months
efficiency in food and energy processes.29 GEA Capital Markets Day June 29-30, 2011, Niels Graugaard
As a high level, full scope supplier of internationally uniform quality, GEA benefits from the food industry by acting according to the current trends
• High hygienic standards for food safety
• Optimal process to maintain the functionality of functional food
• Innovative solutions for the production of convenience food
• Advanced and energy efficient technologies for food processing in general
GEA Benefits from the Food Industry
efficiency in food and energy processes.30 GEA Capital Markets Day June 29-30, 2011, Niels Graugaard
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