Gea Group Aktiengesellschaft · XETR:G1A
Gea Group Aktiengesellschaft — GEA Group — Investor Day (October 2016)
110 slides from Gea Group Aktiengesellschaft's investor day presentation, Oct 5, 2016
Slide 1: GEA 2016 Capital Markets Day
GEA 2016 Capital Markets Day LONDON, 5TH OF OCTOBER 2016
Slide 2: Disclaimer
Disclaimer 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 wit
Slide 3: Agenda
Agenda 1 ARTE framework as pillars for GEA’s strategy – Jürg Oleas p. 4 2 OneGEA country sales organization – Oliver Cescotti p. 21 3 OneGEA application focus in solutions engineering – Niels Erik Olsen p. 31 4 Service in OneGEA – Dirk Hämling p. 43 5 Production & Procurement – Steffen Bersch p. 54
Slide 4: ARTE framework as pillars for GEA's strategy
What we have presented to you at our last CMD: ARTE framework as pillars for GEA’s strategy Target Footprint 2020 Applications R egions Technologies Excellence Functional • Exploit market potential • Capture global growth • Strengthen innovation • Increase efficiency in target applications opportuni
Slide 5: Applications are deep-seated within our new organizational structure
Applications are deep-seated within our new organizational structure Executive Board Business Area Equipment Business Area Solutions Technology Centers Solutions Service Application Centers APC Beverage APC Chemical APC Dairy APC Food APC Pharma APC Utilities Ad interim GEA Capital Markets Day - Oct
Slide 6: ARTE framework as pillars for GEA's strategy
What we have presented you at our last CMD: ARTE framework as pillars for GEA’s strategy Target Footprint 2020 Applications R egions Technologies Excellence Functional • Exploit market potential • Capture global growth • Strengthen innovation • Increase efficiency in target applications opportunitie
Slide 7: Strong local region/country organization…
Strong local region/country organization… DACH & North America Northern/Central Eastern Europe Europe Asia-Pacific Western Europe, M. East/Africa Latin America GEA Capital Markets Day - October 2016 7
Slide 8: …already bearing fruits
…already bearing fruits Morocco India Pakistan Mexico Vietnam Colombia Peru Kenya In these countries the order intake roughly doubled YTD August GEA Capital Markets Day - October 2016 8
Slide 9: ARTE framework as pillars for GEA's strategy
What we have presented you at our last CMD: ARTE framework as pillars for GEA’s strategy Target Footprint 2020 Applications R egions Technologies Excellence Functional • Exploit market potential • Capture global growth • Strengthen innovation • Increase efficiency in target applications opportunitie
Slide 10: Innovation: from batch processing to continuous processing
GEA is already performing well in terms of innovation: From batch processing to continuous processing ConsiGma™ continuous tableting line Faster, more consistent and reliable tablet production with reduced use of resources The platforms take up 70% less space than batch plants can be built more qu
Slide 11: Innovation progress in automated milking
GEA is already performing well in terms of innovation: Innovation progress in automated milking 2009: MIone 2014: DairyProQ 2016: Monobox • Multi Box robot using one robot arm for • First robot parlor which enables larger • Utilization of the modular platform as centre multiple boxes farms to milk u
Slide 12: With OneGEA we can do even better!
With OneGEA we can do even better! Currently, more than 600 engineers are driving innovation across products and technologies under one central management. OneGEA is the right platform for achieving even more! GEA Capital Markets Day - October 2016 12
Slide 13: Why do we innovate?
Why do we innovate? Sales Main driver for additional sales: breakthrough innovation Maintaining competitive position of current product portfolio through incremental innovation Sales decrease of current product portfolio without innovation 2016 2017 2018 2019 2020 2021 Both, incremental and breakthr
Slide 14: Innovation dashboard steering GEA's innovation portfolio
The innovation dashboard enables the effective steering of GEA‘s innovation portfolio 1 [EURm Sales new products 2 [#]Ideas/projects per innovation phase 3 Time to market and % of total sales] [years] EUR Xm EUR Xm X% X% EUR Xm EUR Xm X% X% 12/2015 2014 2015 Q2 2016 06/2016 Front End + Foundation FY
Slide 15: ARTE framework as pillars for GEA's strategy
What we have presented you at our last CMD: ARTE framework as pillars for GEA’s strategy Target Footprint 2020 Applications R egions Technologies Excellence Functional • Exploit market potential • Capture global growth • Strengthen innovation • Increase efficiency in target applications opportunitie
Slide 16: Project Fit for 2020: from four segments to two Business Areas
Project “Fit for 2020”: From four stand-alone Segments to two integrated Business Areas Former organization New current organization Executive Board Executive Board FT ME RT PE Head- BA BA Global SSC quarter Equipment Solutions Corp. Center Support Support Support Support Regions Regions Regions Reg
Slide 17: Fit for 2020: Savings & one-off charges
“Fit for 2020”: Savings & one-off charges Build-up of minimum cumulative savings One-off charges (Σ 2015/16): [EURm] ~ 1.5 – 2.0x long term annual savings 125 • Severance packages • Training / relocation • SSC build-up 80 • Office consolidation • IT system changes • External project support 23 •
Slide 18: Fit for 2020: key success factors
Fit for 2020: Smooth and cost-conscious process - Key success factors Stringent planning and tracking of execution Clear responsibilities & managers’ commitment to saving targets Close cooperation with work council on socially acceptable solutions Use of natural fluctuation and internal job ma
Slide 19: Key Performance Indicators per FTE
Key Performance Indicators per FTE (LTM; base year Q4 2014) LTM Order Intake per FTE LTM Sales per FTE 8% 4% 6% 3% 4% 7% 4% 1% 2% 2% 2% 4% 2% 2% 2% 0% 1% 2% 1% 1% -1% -2% 0% Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 LTM Operating EBITDA per FTE LTM Operating EBIT per FT
Slide 20: Agenda
Agenda 1 ARTE framework as pillars for GEA’s strategy – Jürg Oleas 2 OneGEA country sales organization – Oliver Cescotti 3 OneGEA application focus in solutions engineering – Niels Erik Olsen 4 Service in OneGEA – Dirk Hämling 5 Production & Procurement – Steffen Bersch 6 One Engineering – Kristina
Slide 21: Oliver Cescotti
Oliver Cescotti (53) With GEA since: 2006 Current position: Country Manager of the Russian Federation Country Cluster Prior responsibilities: • 2006 – 2016: Managing Director of GEA Refrigeration Russia Education: Political Science at the FU Berlin and the LMU Munich, Germany GEA Capital Markets Day
Slide 22: GEA's footprint in Russia at a glance
GEA’s footprint in Russia at a glance Headquarter • Headquartered in Moscow • 2 main workshops in the Moscow region • More than 350 employees of which: 99% are Russian native speakers Over 110 are after-sales service employees More than 200 are engineers (mostly in Workshop Service and BA Solu
Slide 23: GEA Russia strong growth despite depreciating Ruble
GEA Russia achieved strong EUR-denominated growth despite a strongly depreciating Ruble Order Intake development in Russia in EURm 160 140 +7% y/y 120 +9% y/y 100 80 60 40 20 0 2014 2015 2016 e 1 EUR = 51 RUB 1 EUR = 68 RUB 1 EUR = 75 RUB annual average annual average average L12M per 30 Sep 2016 De
Slide 24: The Russian market offers further growth potential
The Russian market offers for GEA further growth potential After restricting imports of food, pharma and other products Russia now Strategy of self- strives to become self-sufficient; the government provides financing support to sufficiency local producers Demand for This policy stimulates demand fo
Slide 25: When in Rome, do as the Romans do
“When in Rome, do as the Romans do” Before OneGEA: Under OneGEA: Product 1 Product 2 Product 3 Product 1 Product 2 Product 3 Integrated approach Separate sales people OneGEA offers process solutions integrating all Offers not in customer’s local language necessary components Offers not refle
Slide 26: GEA back in bidding process for a key project
GEA was able to participate again in the bidding process for a key project GEA was out of the • Separate sales efforts of 3 GEA bidding process for a companies starch factory in • No added value for the client by 2013/14… considering 3 contracts • One face to the customer … now, GEA is back in • Opt
Slide 27: Competitive advantage: local assembly workshop (1/2)
Competitive advantage: multi-functional local assembly workshop (1/2) 1. Local customizing of standard components from GEA core factories is now possible 2. Providing the technical documentation in local language to obtain approval from local governmental authorities for entire process lines integra
Slide 28: Competitive advantage: local assembly workshop (2/2)
Competitive advantage: multi-functional local assembly workshop (2/2) 5. A local workshop gives the customer more comfort about service backup and adds to GEA’s reputation of reliability and visibility in the market 6. 99% of local staff are Russian native speakers with over 200 engineers reflecting
Slide 29: Further products can be sourced locally in future
Further products can be sourced locally in future Example: components for a wellhead depletion gas booster station Russian Imported Current Future Main • Screw compressor components • Electric motor • Valves • Inlet filter – separator Gas circuit • Gas filter • Gas cooler • Oil separator • Valves Lu
Slide 30: Agenda
Agenda 1 ARTE framework as pillars for GEA’s strategy – Jürg Oleas 2 OneGEA country sales organization – Oliver Cescotti 3 OneGEA application focus in solutions engineering – Niels Erik Olsen 4 Service in OneGEA – Dirk Hämling 5 Production & Procurement – Steffen Bersch 6 One Engineering – Kristina
Slide 31: Niels Erik Olsen
Niels Erik Olsen (50) With GEA since: 1991 Current position: Member of the Executive Board responsible for the Business Area Solutions Prior responsibilities: • 2015: Head of Application Center, Business Area Solutions • 2010 – 2014: Member of the Management Board of the former GEA Process Engineeri
Slide 32: OneGEA setup for Food Applications
The OneGEA setup for Food Applications should reflect the complexity of our customers’ business • Food industry dominated by large global producers • Leading producers covering a wide range of end- products • Application coverage across many types of raw materials and many possible processing method
Slide 33: APC Food Promise to Customer
APC Food Promise to Customer A Good Night’s Sleep Our solutions’ reliability is rooted in our process and application expertise, which drives us to proactively assist in optimizing our customers’ business. At APC Food we share a powerful sense of responsibility to help our customers thrive and grow
Slide 34: GEA's food expertise covers a wide range of applications
GEA’s food expertise covers a wide range of applications and sub-applications Sub-APC: Coffee & Tea Frozen Food Bakery & Confectionary Oils, Starch & Ingr. APPLICATIONS Starch & Coffee Edible Starch Liquid Meats & Fruits & Ready Confectionary Other Food & Tea Oils Derivatives Ingredients Food Seafoo
Slide 35: Application Centers engineer solutions for local customer needs
In OneGEA, Application Centers (APCs) engineer solutions to meet specific local customer needs Customer Sales & Service Support Dairy Beverage Food Chemical Pharma Utilities Application Engineering BA Solutions BA Equipment Technologies & Components GEA Capital Markets Day - October 2016 35
Slide 36: OneGEA Push and Pull dynamics
OneGEA Push and Pull dynamics make for a much more focused offering for diverse market demands Customer Salesforce systematically Customer enquiries working to expand customer generating innovation ideas for Pull Push base and geographical specific applications footprint Country Organization SALES &
Slide 37: Accomplishments within Application Center Food since Go Live
Much has been accomplished within the Application Center Food since Go Live in June 2015 Before OneGEA go-live: Status per October 2016: Long-term Ambition: • Food organization starting to Food • Fragmented food setup with • Strong Food organization build to support growing Organization few or no de
Slide 38: Cooperation across Business Areas for solution supply in Food
Close cooperation across GEA Business Areas (BA) to offer solution supply in key Food Applications EXAMPLE: Ingredients (Veg. Protein; Hydrolysed) – Process Steps, GEA Presence: Cleaning, Oil Starch Separation Fiber wash, Hydrolysis Process Fiber Neutralize Concen- Packing grinding Extraction Handli
Slide 39: Customers' demand for full line solution supply
GEA focus on offering solutions is well in line with our customers’ demand for full line solution supply GEA Customer Rationale for full line solutions supply: EXAMPLE: Survey conducted among GEA customers in the meat processing industry Type of equipment for investment n=81 Minimize risk of product
Slide 40: APC Food overall: Ambition statement
APC Food overall: Ambition statement Rationales and objectives Sub- M&A Growth potentials Application opportunities Add process steps from grinding to extraction Coffee & Tea Roll-out recent innovations: SHYE to strengthen position in coffee extraction Increase market share in liquid food (e
Slide 41: Focus on leveraging existing food capabilities
Focus on leveraging existing food capabilities in GEA to grow APC Food Applications Regions Technologies Functional Excellence • Strong competencies in core • Global GEA footprint • Technology white spots in core • Strong GEA project mgt. and food applications • Need for dedicated food sales applica
Slide 42: Agenda
Agenda 1 ARTE framework as pillars for GEA’s strategy – Jürg Oleas 2 OneGEA country sales organization – Oliver Cescotti 3 OneGEA application focus in solutions engineering – Niels Erik Olsen 4 Service in OneGEA – Dirk Hämling 5 Production & Procurement – Steffen Bersch 6 One Engineering – Kristina
Slide 43: Dirk Hämling
Dirk Hämling (43) With GEA since: 1995 Current position: Head of GEA’s Global Service Operations (Business Area Equipment & Business Area Solutions) Prior responsibilities: • 2015 – 2016: Head of Service Business Area Solutions • 2006 – 2015: Managing Director of GEA Brewery Systems and responsible
Slide 44: GEA Service organization: Yesterday versus today
GEA Service organization: Yesterday versus today Former organization New current organization Executive Board Executive Board FT ME RT PE Head- BA BA Global SSC quarter Equipment Solutions Corp. Center Service Service Service Service Service Service Service Service Service Service Service Service Se
Slide 45: OneGEA = One face to the customer
OneGEA = One face to the customer Service Yesterday Service Today/Tomorrow BU BU Separation Evaporation GEA Service Manager BU BU Drying Flow Components BU Liquid Plant Manager Plant Manager GEA Capital Markets Day - October 2016 45
Slide 46: GEA Service: Future business model
GEA Service: Future business model Service prior to OneGEA Future business model Reactive spare … proactive parts business … solutions business • > 70% spare parts sales • Solution-oriented customer service (ARTE) • Primarily reactive service sales & focus on new • Pro-active global service sales st
Slide 47: Customer Centricity: Customer value
How does GEA Service meet customer demands? Customer segmentation Performance Result driven oriented Performance Customer Centricity: Customer value Plants service management Partnership Overall offer driven equipment effectiveness consulting Process User based Lines predictive oriented Mechanical m
Slide 48: GEA Service portfolio structure at a glance
GEA Service portfolio structure at a glance Beginning of life services Consulting services & operations Installation Service software products Commissioning On-site project support Training Performance contracts Life-time services Extended-life services Plant Spare parts Up-grades Life Cycle Correct
Slide 49: GEA's key growth levers in service (1/2)
GEA’s key growth levers in service (1/2) Historic hurdles & weak points Key growth levers Our ambition Automatically generated & • No overall & comprehensive service OPOSO 1 offerings for newly sold projects One project one service order customized service offerings for complete process lines • No c
Slide 50: GEA's key growth levers in service (2/2)
GEA’s key growth levers in service (2/2) Historic hurdles & weak points Key growth levers Our ambition Advanced service Develop service concepts with • More reactive breakdown services 4 with high focus on spares portfolio development high focus on life cycle equipment efficiency (e.g. digital servi
Slide 51: Deep-dive: Drive service excellence
Deep-dive: Drive service excellence Today’s spare part logistics Future spare part logistics GEA workshops & ext. suppliers Regional hubs Regions/ Countries Customers Customers • Mutliple stock locations & duplication of parts • Consolidation of stock locations to central hubs • Decentralized & limi
Slide 52: Our service ambition: > 30% of sales
Our service ambition: > 30% of sales Development of service business: Service sales as a % of group sales > 30% 30% 29% 27% 27% 27% FY 2012 FY 2013 FY 2014 FY 2015 Q2 2016 LTM FY 2020 GEA‘s service business to reach more than 30% by 2020 GEA Capital Markets Day - October 2016 52
Slide 53: Agenda
Agenda 1 ARTE framework as pillars for GEA’s strategy – Jürg Oleas 2 OneGEA country sales organization – Oliver Cescotti 3 OneGEA application focus in solutions engineering – Niels Erik Olsen 4 Service in OneGEA – Dirk Hämling 5 Production & Procurement – Steffen Bersch 6 One Engineering – Kristina
Slide 54: Steffen Bersch
Steffen Bersch (47) With GEA since: 2000 Current position: Member of the Executive Board responsible for Business Area Equipment Prior responsibilities: • 2014 – 2015: Executive Vice President Business Unit Mechanical Separation (Business Area Equipment) • 2010 – 2014: Vice President Service Interna
Slide 55: GEA overview on Production and Supply Chain
GEA overview on Production and Supply Chain Production Supply Chain & Procurement Production sites Headcount (FTE)’s Spend volume Number of suppliers GEA 65 ~ 4,550 2.5bn ~ 26,000 EUR GEA Capital Markets Day - October 2016 55
Slide 56: Economic & political uncertainties forcing flexibility
Increasing economic & political uncertainties forcing companies to increase flexibility Economic & political uncertainties increasing … … forcing enterprises to adapt Business models need to be adapted and global flexibility increased to balance out these risks Particularly asset- and capex- int
Slide 57: Our Operations Strategy 2020 based on ARTE
Our Operations Strategy 2020 based on ARTE Target Footprint 2020 A pplications Regions Technologies EFunctional xcellence Focus on core Production close to Excellent and lean manufacturing GEA’s customers production activities Technological Reduced total Balanced regional leadership in core system c
Slide 58: Challenges addressed by our Operations Strategy
Challenges addressed by our Operations Strategy Regional balancing of production footprint 1 Consolidation of production into multi-purpose sites 2 Make or Buy review (products/process steps) 3 Shifting sourcing volumes to best-cost countries 4 Bundling of sourcing volumes to preferred suppliers 5 G
Slide 59: Challenges addressed by our Operations Strategy
Challenges addressed by our Operations Strategy Regional balancing of production footprint 1 Consolidation of production into multi-purpose sites 2 Make or Buy review (products/process steps) 3 Shifting sourcing volumes to best-cost countries 4 Bundling of sourcing volumes to preferred suppliers 5 G
Slide 60: Regional balancing of production footprint
1 2 3 4 5 Regional balancing of production footprint Current regional distribution of sales and production 100% GEA’s production is currently 90% concentrated in a few regions 80% Many country sales Share of production hours 70% organizations import from few 60% production countries 50% 40% 30
Slide 61: Regional balancing of production footprint
1 2 3 4 5 Regional balancing of production footprint Regionalization of production wherever volume justifies Raise share of value added to above 50% wherever we choose to produce Compensate real wage increases in high labor cost countries by productivity increases of at least 5% p.a. Establish
Slide 62: Real wage growth in Germany 2012 to 2015
For example in Germany, real wage growth over the period 2012 to 2015 was 6.2% 110% 108% 109.1% 106% 105.9% 106.2% 104% 103.4% 102% 102.9% 101.4% 100% 100.0% 98% 96% 94% 2012 2013 2014 2015 Nominal pay increase Inflation adjusted pay increase Collectively agreed wage raises metal industry (“tariflic
Slide 63: Challenges addressed by our Operations Strategy
Challenges addressed by our Operations Strategy Regional balancing of production footprint 1 Consolidation of production into multi-purpose sites 2 Make or Buy review (products/process steps) 3 Shifting sourcing volumes to best-cost countries 4 Bundling of sourcing volumes to preferred suppliers 5 G
Slide 64: Consolidation of production into multi-purpose sites
1 2 3 4 5 Consolidation of production into multi-purpose sites Production sites of GEA ranked by headcount GEA’s manufacturing footprint consists of 65 production sites 600 with an average of 78 FTEs / site 500 6 multi-purpose sites are already located in China, India, US and 400 Germany Headcou
Slide 65: Consolidation of production into multi-purpose sites
1 2 3 4 5 Consolidation of production into multi-purpose sites Specialized sites Multi-Purpose sites Benefit from scaling effects and Manufacturing site flexibility of work force utilization Product lines Increase utilization of the sites and enhance flex capacity Setup will require major cape
Slide 66: Challenges addressed by our Operations Strategy
Challenges addressed by our Operations Strategy Consolidation of production into multi-purpose sites 1 Regional balancing of production footprint 2 Make or Buy review (products/process steps) 3 Shifting sourcing volumes to best-cost countries 4 Bundling of sourcing volumes to preferred suppliers 5 G
Slide 67: Focus own manufacturing on GEA's core technologies
1 2 3 4 5 Focus own manufacturing on GEA’s core technologies Focus in-house production capacities on CORE technologies and processes Semi-core will support flexibility through capacity outsourcing Manufacturing outsourcing and supplier integration for non-core activities 2015 2020 Share of cor
Slide 68: Challenges addressed by our Operations Strategy
Challenges addressed by our Operations Strategy Consolidation of production into multi-purpose sites 1 Regional balancing of production footprint 2 Make or Buy review (products/process steps) 3 Shifting sourcing volumes to best-cost countries 4 Bundling of sourcing volumes to preferred suppliers 5 G
Slide 69: Shifting sourcing volumes to best-cost countries
1 2 3 4 5 Shifting sourcing volumes to best-cost countries 2015 Share of Sourcing Volumes per Region 69% Shift sourcing volumes to best- 63% cost-countries (Eastern Europe and APAC) 18% 13% 18% Increase regional sourcing for 5% 7% 8% existing best-cost production sites Americas Western Europe Ea
Slide 70: Challenges addressed by our Operations Strategy
Challenges addressed by our Operations Strategy Consolidation of production into multi-purpose sites 1 Regional balancing of production footprint 2 Make or Buy review (products/process steps) 3 Shifting sourcing volumes to best-cost countries 4 Bundling of sourcing volumes to preferred suppliers 5 G
Slide 71: Bundling of sourcing volumes to preferred suppliers
1 2 3 4 5 Bundling of sourcing volumes to preferred suppliers Cumulated Spend Volume GEA spend volume in 2015 of 2.5bn EUR for direct and indirect 100% materials 90% 80% In total ~26,000 suppliers are 80% Spend used across both Business Areas 70% 2,600 Suppliers 60% More than 22,000 suppliers
Slide 72: Bundling of sourcing volumes to preferred suppliers
1 2 3 4 5 Bundling of sourcing volumes to preferred suppliers GEA Spend 2015 ~ 2.5bn EUR Structuring of global spend into common spend categories 2015 2020 Nomination of centrally acting Share of centrally Category Managers and Lead managed spend 12% >40% Buyers to foster cross-functional cost r
Slide 73: EUR 60–80m gross savings to build up until 2019
EUR 60 – 80m gross savings to build up until 2019 Consolidation of production into multi-purpose sites 1 Anticipated gross savings from optimization in production & supply Regional balancing of production footprint 2 chain until 2019 Net savings effect not predictable from current Make or Buy re
Slide 74: Agenda
Agenda 1 ARTE framework as pillars for GEA’s strategy – Jürg Oleas 2 OneGEA country sales organization – Oliver Cescotti 3 OneGEA application focus in solutions engineering – Niels Erik Olsen 4 Service in OneGEA – Dirk Hämling 5 Production & Procurement – Steffen Bersch 6 One Engineering – Kristina
Slide 75: Kristina Böe
Kristina Böe (46) With GEA since: 1995 Current position: Head of Cross-Application Execution (Business Area Solutions) Prior responsibilities: • 2005 – 2015: Technical Director at GEA Brewery Systems GmbH • 2003 – 2005: Head of Engineering with power of procuration • 2000 – 2003: Head of Engineering
Slide 76: Challenges before OneGEA engineering
Before OneGEA we had to deal with the following challenges: 1) Many different sites with incompatible IT platforms 2) Different sites follow different demand cycles Site A Site B IT System A X IT System B Pharma (site B) X X X Coffee (site A) Site C IT System C X Site D IT System D Year 1 Year 2 Yea
Slide 77: One Engineering vision: flexible global sharing of resources
One Engineering vision: Flexible global sharing of resources on one common platform One One One Engineering Engineering Engineering system system system • „Follow the sun“ collaborative engineering • Global transparency of sub-supplier tasks • Global flexibility in capacity management GEA Capital Ma
Slide 78: OneGEA created common engineering pools
OneGEA created common engineering pools allowing to share resources Yesterday: Before 2014 Today Engineering pool Request for project support Application 1 Application 2 X Application 1 Application 2 No exchange of capacities Sharing of capacities GEA Capital Markets Day - October 2016 78
Slide 79: One common engineering system
Vision: One common engineering system will make the engineering pools even more efficient All sites using one common engineering system State-of-the-art engineering platform comprising all engineering facets Site A Site B One Engineering One System One System Plant design Component design Site C Sit
Slide 80: Common engineering pools ensure optimal utilisation of engineers
Common engineering pools ensure optimal utilisation of engineers Engineering pool Engineering pool Capacity flexibly contributed Application dedicated capacity Capacity needed Capacity needed Capacity Capacity needed needed Site A (Coffee) Site B (Pharma) Site A (Coffee) Site B (Pharma) Year 1 Year
Slide 81: A collaboration success story
A collaboration success story • GEA engineers Alex and Charles are both part of the North American engineering pool • Alex, responsible project engineer, was unavailable for a specific weekend • Charles filled in for him, went to the customer’s site and continued working where Alex from Canada Alex
Slide 82: One Engineering – Business Benefits
One Engineering – Business Benefits Increase efficiency “One common language” eliminates double work Lower procurement cost Common component database facilitates usage of standard components from preferred vendors Flexibility of resources fosters full utilization independent of cycles Sharing a stat
Slide 83: Agenda
Agenda 1 ARTE framework as pillars for GEA’s strategy – Jürg Oleas 2 OneGEA country sales organization – Oliver Cescotti 3 OneGEA application focus in solutions engineering – Niels Erik Olsen 4 Service in OneGEA – Dirk Hämling 5 Production & Procurement – Steffen Bersch 6 One Engineering – Kristina
Slide 84: Stefan Heimann
Stefan Heimann (37) With GEA since: 1999 Current position: Head of Shared Service Center Prior responsibilities: • Since Sept 2014: CIO GEA Group AG and Managing Director of GEA IT Services GmbH • 2010 – 2015: CIO GEA Mechanical Equipment • 2008 – 2009: Deputy CIO GEA – Division Mechanical Separatio
Slide 85: Why GEA outsourced transactional procedures to shared service centers
Why GEA outsourced repetitive transactional procedures to 3rd party shared service centers • Economies of scale in OneGEA transactional services Executive Board justifies centralized pooling • Process standardization easier BA BA to achieve under Global Shared Equipment Solutions central control Cor
Slide 86: SSC transition timeline
Transition in all countries now in stable mode, further process optimization ahead Transition of Transformation • Drive digitalization by local back office of processes standardizing functions to 3rd • Finance/ processes party SSC Accounting • Extend scope (”lift and shift“) • HR of services 2015
Slide 87: SSC implementation with rapid lift and shift approach pays off
GEA’s ambitious SSC implementation scenario with rapid ‘lift and shift’ approach pays off • Full transparency and control over historically grown, inefficient processes Control & • Harmonization can now be decided and implemented centrally by Transparency one strong SSC organization • Process design
Slide 88: Current scope of GEA's Shared Service Center
Current scope of GEA’s Shared Service Center GEA SSC Finance/ Human IT Accounting Resources Accounts payable Employee Lifecycle IT Delivery & Accounts receivable Management Enterprise Recruiting Management Asset schedule administration IT Security & Data Travel expenses Training ad
Slide 89: Transition Implementation - Wave Schedule
Transition Implementation - Wave Schedule Transition activities closed by the end of 2016 Jul. Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec. Wave 11 Wave 10 Wave 9 HR Wave 8 F&A Wave 7 Wave 6 Wave 5 Wave 4 HR Wave 3 F&A Wave 2b (HR) Wave 2a (F&A) Remaining ent
Slide 90: SSC serving all GEA countries from two hubs
SSC serving all GEA countries from two hubs – Overview Bucharest Manila GEA SSC Location GEA countries with all SSC 85% services (F&A + HR + IT) GEA countries with IT, SSC HR 2% and partial SSC F&A services GEA countries with IT service 6% and local outsourcing of SSC F&A / HR services 3% GEA countr
Slide 91: SSC business volume indicators
SSC business volume indicators Introducing process performance measurement GEA Capital Markets Day - October 2016 91
Slide 92: Quick wins and benefits from SSC
Quick wins and benefits from SSC GEA benefits from SSC already now Already implemented measures: Uniform workplace conditions (same workflow tools, central helpdesk, shared guidelines) KPI based performance control of transactional processing Benefits Higher transparency of process, applicatio
Slide 93: Transformation of services within current scope
Transformation of services within the current scope has started GEA SSC Finance/ Human IT Accounting Resources Local ERP Global HR process IT Landscape optimization, replacements design elimination of local platforms Standardization invoice HR Core Cloud Service improvement processing
Slide 94: SSC: Next steps within existing scope
SSC: Next steps within existing scope Standardization as key enabler for digitalization Fully standardized IT services Process and system standardization • Consolidation of ERP & application landscape into one global ERP system • Implement robotic process automation (RPA) Transfer ever more process
Slide 95: Future SSC opportunities: Global Business Services
Future SSC opportunities for GEA Evolve to Global Business Services Procure to Pay (PTP) process: Procurement / indirect spend incl. catalogue management, global sourcing support Order to Cash (OTC) process: Order handling for high-volume standard orders Service order handling and scheduling of serv
Slide 96: Agenda
Agenda 1 ARTE framework as pillars for GEA’s strategy – Jürg Oleas 2 OneGEA country sales organization – Oliver Cescotti 3 OneGEA application focus in solutions engineering – Niels Erik Olsen 4 Service in OneGEA – Dirk Hämling 5 Production & Procurement – Steffen Bersch 6 One Engineering – Kristina
Slide 97: Agenda: Financial targets until 2020, Capital allocation
Agenda 1 Financial targets until 2020 2 Capital allocation GEA Capital Markets Day - October 2016 97
Slide 98: Updated Financial Mid-term Targets
Updated Financial Mid-term Targets Target values until 2020 CAGR Organic Sales Growth CAGR (2016 – 2020) 4% to 6% Service to Sales Ratio: >30% Operating EBIT Margin: 13% to 16% Working Capital to Sales Ratio: 10% to 12% Capex to Sales Ratio: 1.5% to 2.0%* Cash Flow Driver Margin: 12% to 15% ROCE: 20
Slide 99: Mid-term organic sales growth potential 4% to 6%
GEA sees its mid-term organic sales growth potential in the range from 4% to 6% (CAGR 2016-20) All customer industries are assumed to contribute positively to organic growth Top 3 growth contributors: 1 Dairy Processing 2 Food 3 Pharma/Chemical GEA Capital Markets Day - October 2016 99
Slide 100: Operating EBIT Margin target: 13% to 16%
Financial Targets for FY 2017 - FY 2020: Operating EBIT Margin: 13% to 16% GEA has gradually managed up Operating EBIT Margin to > 11% Operating EBIT-Margin (LTM) Max. 16% 11.7%* 11.9%* 11.4% 10.5% 10.3% 10.6% Min. 13% 8.8% 8.4% 6.8% Upside: Service Op. leverage Underperforming unit Improved
Slide 101: Agenda: Financial targets until 2020, Capital allocation
Agenda 1 Financial targets until 2020 2 Capital allocation GEA Capital Markets Day - October 2016 101
Slide 102: M&A status-quo since disposal of Heat Exchangers
M&A status-quo: What has been acquired since the disposal of Heat Exchangers Acquired annual sales volume 221 [EURm] 85 35 11 50 40 Scan Vibro / Comas CMT Hilge Imaforni Sum De Klokslag GEA managed to identify, approach and acquire a portfolio of margin accretive companies with a high strategic fit
Slide 103: Reasons for discontinued deals
We have discontinued several deals for the following reasons Compliance (e.g. legal and tax compliance, IP infringements) Complexity (e.g. smaller deals with significant relocation and reorganisation requirements) Restructuring cases (e.g. companies entailing significant operational restructuring ef
Slide 104: Acquisition criteria focus on strategy and value creation
Acquisition criteria focus on strategy and value creation A ARTE fit Applications Regions Technologies Functional Excellence B Strategic fit Market Target attractiveness attractiveness C Value creation Earnings Total share- DCF > CFD > ROCE > per share holder return Price hurdle rate hurdle rate GEA
Slide 105: Capital allocation: determining the amount of residual cash
Capital allocation: Determining the amount of residual cash We will have a detailed look at: 1 Which sources of funds are available? 2 For which purpose in the near/medium term should we retain which amounts of funds? 3 How much, if any, residual cash would be left over? Note: For illustrative purpo
Slide 106: Timeline capital allocation decisions
Timeline capital allocation decisions March/April Q3 2014 Q4 2014 - now October 2016 Jan/Feb 2017 2017 Acquisition of CMD 2014: Scan Vibro, De CMD 2016: Decision on use of Capital allocation Klokslag, CMT, Presentation of Cash check residual cash priorities Comas, Hilge and timeline Imaforni GEA Cap
Slide 107: Summary
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Slide 108: Summary of the key messages
Summary of the key messages OneGEA enables: Regions: Market share gains in many countries due to systematic approach, critical size, cross-selling Application focus: Market share gains in neglected customer industries (e.g. food) Service: Further growth opportunities (e.g. OPOSO) Production & Procur
Slide 109: GEA's journey hasn't ended yet, it only just started
GEA‘s journey hasn‘t ended yet, it only just started GEA Capital Markets Day - October 2016 109
Slide 110: gea.com
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