j.p. morgan european capital goods ceo conference 2016

J.P. Morgan European Capital Goods CEO Conference 2016

Jürg Oleas

PENNYHILL PARK HOTEL, 10 JUNE 2016

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 with respect to the

future are characterized by the use of words such as "expect", "intend", "plan", "anticipate", "believe",

"estimate" and similar terms. 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 materially from the estimates given here.

Factors that could cause such a divergence include, inter alia, 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. Given these uncertainties,

readers should not put undue reliance on any forward-looking statements. We undertake no obligation

to update or revise any forward-looking statements.

Due to rounding, the sum of percentages of order intake and sales by region as well as by customer

industry may vary from 100%.

Disclaimer

2 J.P. Morgan European Capital Goods CEO Conference June 2016

ARTE framework as pillars for GEA’s strategy


Target Footprint 2020

Regions

• Capture global growth

opportunities

• Expand local presence

• Coordinate regional

approaches across

GEA

Technologies

• Strengthen innovation

and technological

leadership

• Foster cross-business

colla-boration in R&D

Functional Excellence

• Increase efficiency

in operations and

support functions

• Reduce organizational

complexity

Applications

• Exploit market potential

in target applications

• Align GEA-wide

application strategy

and customer

approach

Project “Fit for 2020”: From four stand-alone Segments to two integrated Business Areas


Former organization New current organization

• 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

Executive Board

RT FT ME PE Head-

quarter

Regions Regions Regions Regions

Support Support Support Support

Equipment BA

Solutions BA

Global Corp.

Center

SSC

Regions / Countries

Executive Board

Financial Targets for FY 2017 - FY 2020: Operating EBIT Margin: 13% to 16%


* In FY 2015 €23m out of the guided €125m cost savings until 2017 were already achieved

GEA has gradually managed up Operating EBIT Margin to > 11%

8.8%

6.8%

8.4%

10.5% 10.3% 10.6% 11.4% 11.7%

2008 2009 2010 2011 2012 2013 2014 2015 2 1 2017 12 13 2020

Operating EBIT-Margin (LTM)

Min. 13%

Max. 16%

Upside:

Service

Op. leverage

Underperforming unit *

• GEA to now kick-off in-depth analysis of optimization potential

• Quantification of the details in H2 2016

Global manufacturing footprint

instrumental for scale economies at GEA

Material costs (~EUR 2.2bn) are the

most significant cost lever for GEA

Implementation of “OneGEA” organization opens up further optimization potentials

J.P. Morgan European Capital Goods CEO Conference June 2016 6

Use of funds: Acquisitions have priority


2. Strengthen GEA’s application know-how by doing (bolt-on) acquisitions

3. Repayment of financial debt

4. Invest in organic business development (Service, R&D, regional presence)

5. Distribution of residual cash to shareholders

Capital allocation priorities

1. Dividend payments: Change of payout ratio from 1/3 to 40-50% of net income

Acquisition criteria focus on strategy and value creation


ARTE fit A

Strategic fit B

Value

creation

C

Market

attractiveness

Target

attractiveness

Earnings

per share

Total share-

holder return

DCF >

Price

CFD >

hurdle rate

ROCE >

hurdle rate

Functional Excellence Regions Applications Technologies

Order trends by customer industry as of Q1 2016


Q1 16 LTM Share of order intake

Q/Q Y/Y Y/Y Q1 16 LTM

Dairy Farming 13%

Dairy Processing 24%

Food 23%

Beverages 12%

Food & Beverages 72%

Pharma 8%

Chemical 7%

Pharma/Chemical 15%

Oil & Gas 1%

Marine 3%

Others 9%

Other Industries 13%

GEA Group 100%

Q1 16 Quarter selective

Less than -5% Between -5% and -1% Between -1% and 1% Between 1% and 5% More than 5%

Frozen Food

Current scope of BA Solutions’ food applications


Sub-

Applications

Coffee &

Tea Edible Oils

Starch &

Starch

Derivatives Ingredients

Liquid

Food

Meat &

Seafood

Fruit &

Vegetables

Ready

Meals Bakery

Edible Oils

Margarine

Spreadable

Oils & Fats

Sauces

Dressings

Processed Meat

& Poultry

Processed Fish

& Seafood

Instant Coffee

Instant Tea

Coffee Extract

Tea Extract

Cocoa Powder

X-in-1

(Coffee/Tea; Milk;

Sugar)

Starch

Modified Starch

Cultures

Emulsifiers

Flavors

Frozen Fruit

Frozen

Processed

Potatoes

Meat Substitutes

Pizza

Ready Meals Bread

Cakes

Biscuits

Pastries

Frozen Baked

Goods

Frozen Desserts

Frozen

Vegetables

Mayonnaise

Ketchup

Tomato Pastes &

Purees

Spreads

Soups

Dried Fruits &

Vegetables

Coffee / Tea

Whitener

Proteins

Raising Agents

Sugars &

Sweeteners

Fibers

Pet Food

Ingredients

Coffee & Tea

Oils, Starch & Ingr. Bakery

Starch

Derivatives

Applications

• In the absence of any further weakening of global economic growth and

• provided that there are no significant currency translation impacts, and

• before new acquisitions in 2016 as well as

• before one-offs we are aiming in FY 2016 for:

FY 2016 guidance

11

Operating EBITDA (EURm)

645 – 715

Operating Cash Flow Driver Margin

10.0% - 11.0%

Sales

moderate growth (in reported terms)

J.P. Morgan European Capital Goods CEO Conference June 2016

gea.com

j.p. morgan european capital goods ceo conference 2016

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