DGAP-News: GEA Group Aktiengesellschaft
/ Key word(s): Annual Results/Forecast
04.03.2021 / 07:30
The issuer is solely responsible for the content of this announcement.
PRESS RELEASE
GEA significantly increases profitability in 2020 and expects revenue and earnings growth in 2021
- EBITDA before restructuring increased by 11.1% to EUR 532 million; margin improved by 170 basis points to 11.5%
- Revenue slightly down by 5.0% to EUR 4,635 million (2.6% decrease at constant exchange rates)
- Increase in ROCE by 650 basis points to 17.1%
- Proposal for stable dividend of EUR 0.85 per share
- 2021 guidance: slight organic growth in revenue; EBITDA before restructuring measures between EUR 530 million and EUR 580 million, ROCE between 16 and 20%
- Mid-term targets to 2022 increased
Düsseldorf, March 4, 2021 – In 2020, GEA further strengthened its operational results and its financial and net asset position in a highly challenging economic environment. Despite the Covid-19 pandemic, both order intake (EUR 4,703 million) and revenue (EUR 4,635 million) declined only slightly. EBITDA before restructuring measures (EUR 532 million) and ROCE (17.1 percent) increased substantially. Net liquidity also rose significantly, increasing by EUR 374 million to EUR 402 million. On this basis, GEA will propose a stable dividend of EUR 0.85 per share to its shareholders. The company expects increased revenue and earnings in 2021.
“GEA came through a challenging 2020 very well. We delivered on our promises and in some cases even exceeded them,” said Stefan Klebert, CEO GEA Group AG. “We increased profitability beyond our own ambitious expectations and sustainably improved key financial performance indicators. Despite the Covid-19 pandemic some of these already meet the mid-term 2022 financial targets we were aiming for. This proves, first and foremost, the stability of GEA’s business model and, secondly, how early and effectively we implemented the right measures.”
Planned measures to improve efficiency successfully implemented
Alongside the short-term measures to manage the impact of the Covid-19 pandemic, it was the efficiency improvement projects launched in 2019 and their systematic implementation that made the most decisive contribution to GEA’s positive performance in 2020. This included among others a reduction of roughly 800 FTEs in the workforce – including temporary workers – at the end of year 2020 relative to the headcount as of June 30, 2019 and procurement process optimization. GEA implemented additional strategic projects in the reporting year including the optimization of the production network and selling three subsidiaries: GEA Bock, Japy and Royal De Boer.
Order intake and revenue robust despite pandemic
Due to the pandemic, the Group order intake of EUR 4,703 million in 2020 was 4.6 percent below the 2019 level (EUR 4,931 million). After adjusting for currency effects, the decrease was 2.2 percent. The company recorded shortfalls primarily in the Food and Beverage project business. By contrast, the trend in the Pharma, Chemical, Dairy Processing and Dairy Farming customer industries was positive.
Revenue declined by 5.0 percent from EUR 4,880 million in 2019 to EUR 4,635 million in the year under review. Adjusted for currency effects, revenue in fiscal year 2020 was down 2.6 percent year on year. The expectation of a slight decline in revenue (at constant exchange rates) for the fiscal year was thus confirmed. Revenue was down in nearly all customer industries except Beverage and Chemical, which generated revenue growth. The Service business also showed slight growth with an upswing of 1.9 percent, adjusted for currency effects. Revenue share went up in 2020 from 32.3 percent in the previous year to 33.6 percent.
Profitability and efficiency significantly increased
At EUR 532 million, EBITDA before restructuring measures was roughly 11 percent higher in 2020 than in the previous year (EUR 479 million), despite lower revenue. The EBITDA margin of 11.5 percent was nearly 170 basis points higher than in the previous year. GEA initially forecast EBITDA before restructuring measures of between EUR 430 million and EUR 480 million for the fiscal year. This expectation was increased in July and again in November, ultimately to more than EUR 500 million. GEA also met this guidance with EUR 542 million, adjusted for currency effects.
The strong increase in return on capital employed (ROCE) from 10.6 percent in the previous year to 17.1 percent is due to the positive earnings performance and to the significantly lower capital employed. Here, too, the guidance was increased twice in the course of the year, from an initial 9.0 to 11.0 percent, to between 15.0 and 17.0 percent most recently. With a final ROCE figure of 17.1 percent, GEA even exceeded its increased guidance.
Strict net working capital management and strong cash generation
Net liquidity was EUR 402 million as of December 31, 2020, compared to EUR 28 million at the end of the previous year. Alongside the improved operating performance, this substantial increase in liquidity resulted from a sharp reduction in net working capital by EUR 266 million. The net working capital to revenue ratio was nearly halved in 2020 to 7.9 percent (previous year: 14.0 percent).
Cash flow from operating activities amounted to EUR 718 million in the reporting year, once again significantly exceeding the 2019 figure (EUR 483 million). Key factors here were the higher EBITDA and above all the reduction in net working capital already mentioned.
Sustainability reporting expanded
GEA stands by its dedication to climate action and sustainability, and even more so during the pandemic. As a global industrial technology leader committed to “engineering for a better world”, GEA takes its global responsibilities seriously. This was confirmed in 2020 when the company was again awarded an “A-” score for its climate protection activities by CDP (formerly Carbon Disclosure Project), which rigorously ranks companies on their environmental performance. And for the first time, GEA was rated for its actions on water security, earning an “A” score from CDP. Going forward, GEA will provide further transparency related to its sustainability commitments. To this end, the Company has again increased the level of information provided in its sustainability report, which will be released today as a stand-alone report for the first time.
Proposal for stable dividend
For fiscal year 2020, GEA intends to uphold its established dividend policy by proposing a stable dividend of EUR 0.85 per share at the Annual General Meeting. In doing so, GEA is once again demonstrating that its shares are a reliable dividend-paying investment.
Growth-focused guidance despite current challenges
“We look towards the future with optimism. The measures we have taken are delivering results and our business model has proved stable, even during a global pandemic. This year, rather than resting on our laurels, we will continue to push ahead systematically. We are confident in GEA’s continued growth potential which is why our mid-term 2022 financial targets are even more ambitious,” explains Stefan Klebert.
For fiscal year 2021, GEA expects slight organic growth in revenue, EBITDA before restructuring measures of between EUR 530 million and EUR 580 million and ROCE of between 16 and 20 percent despite the ongoing pandemic situation.
GEA is adjusting mid-term expectations for selected key performance indicators on which it made major progress last year. The EBITDA margin before restructuring measures is now anticipated to increase to a target range of between 12.5 and 13.5 percent (previously 11.5 to 13.5 percent). GEA currently forecasts a net working capital to revenue ratio of between 8.0 and 10.0 percent by 2022 (previously 12.0 to 14.0 percent).
Financial Key Figures of GEA
(EUR million) |
2020 |
2019 |
Change
in % |
Results of operations |
|
|
|
Order intake |
4,703.0 |
4,931.1 |
-4.6 |
Book-to-bill ratio |
1.01 |
1.01 |
– |
Order backlog |
2,298.5 |
2,412.4 |
-4.7 |
Revenue |
4,635.1 |
4,879.7 |
-5.0 |
EBITDA before restructuring measures |
532.5 |
479.2 |
11.1 |
as % of revenue |
11.5 |
9.8 |
– |
EBITDA |
478.3 |
374.4 |
27.8 |
EBIT before restructuring measures |
331.4 |
271.4 |
22.1 |
as % of revenue |
7.1 |
5.6 |
– |
EBIT |
221.2 |
-109.1 |
– |
EBT |
197.1 |
-125.5 |
– |
Profit for the period |
96.8 |
-170.7 |
– |
ROCE in %1 |
17.1 |
10.6 |
– |
Financial position |
|
|
|
Cash flow from operating activities |
717.8 |
483.2 |
48.6 |
Cash flow from investing activities |
-92.2 |
-141.0 |
34.6 |
Free cash flow |
625.6 |
342.2 |
82.8 |
Net assets |
|
|
|
Net working capital (reporting date) |
366.8 |
682.0 |
-46.2 |
as % of revenue (LTM) |
7.9 |
14.0 |
– |
Capital employed (reporting date) |
1,642.0 |
2,141.1 |
-23.3 |
Equity |
1,921.4 |
2,090.1 |
-8.1 |
Equity ratio in % |
33.8 |
36.6 |
– |
Leverage2 |
-0.9 x |
-0.1 x |
– |
Net liquidity (+)/Net debt (-) |
402.3 |
28.4 |
> 100 |
GEA Shares |
|
|
|
Earnings per share (EUR) |
0.54 |
-0.95 |
– |
Earnings per share before restructuring measures (EUR) |
1.03 |
0.98 |
5.1 |
Market capitalization (EUR billion; reporting date) |
5.3 |
5.3 |
-0.7 |
Employees (FTE; reporting date) |
18,232 |
18,490 |
-1.4 |
Total workforce (FTE; reporting date) |
19,268 |
20,075 |
-4.0 |
1) Capital employed excluding goodwill from the acquisition of the former GEA AG by former Metallgesellschaft AG in 1999 (average of the last 4 quarters).
2) Total net debt/cons. EBITDA based on frozen GAAP (covenant concept). |
Corporate Media and Press:
Marc Pönitz
Peter-Müller-Strasse 12, 40468 Düsseldorf, Germany
Phone +49 (0)211 9136-1500
marc.poenitz@gea.com
About GEA
GEA is one of the world’s largest systems suppliers for the food, beverage and pharmaceutical sectors. The international industrial technology group specializes in machinery and plants as well as advanced process technology, components and comprehensive services. With more than 18,000 employees, the group generated revenue of more than EUR 4.6 billion in fiscal year 2020. A major focus is on continuously enhancing the sustainability and efficiency of customers’ production processes. GEA plants, processes and components help achieve significant reductions in carbon emissions, plastic use and food waste in production worldwide. In this way, GEA makes a decisive contribution toward a sustainable future, fully in line with its corporate philosophy of “engineering for a better world.”
GEA is listed in the German MDAX and the STOXX(R) Europe 600 Index, and is also among the companies comprising the DAX 50 ESG and MSCI Global Sustainability Indices.
More information can be found online at gea.com.
Contact:
GEA Group Aktiengesellschaft
Phone +49 (0)211 9136 1081
Fax +49 (0)211 9136 31087
gea.com
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