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