Gea Group Aktiengesellschaft · XETR:G1A
Gea Group Aktiengesellschaft — Investor Day (September 2021)
153 slides from Gea Group Aktiengesellschaft's investor day presentation, Sep 29, 2021
Slide 1: GEA Capital Markets Day 2021 in London
LONDON, SEPTEMBER 29, 2021 GEA CAPITAL MARKETS DAY 2021 IN LONDON
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: Stefan Klebert, CEO
Stefan Klebert, CEO − At GEA since November 2018, CEO since February 2019 − Studied Mechanical Engineering and holds an MBA − 25+ years of work experience, including senior management and CEO positions in various stock-listed companies CAPITAL MARKETS DAY 2021 3
Slide 4: The Turnaround Story and Mission 26
STEFAN KLEBERT, CEO THE TURNAROUND STORY AND MISSION 26 CAPITAL MARKETS DAY 2021 4
Slide 5: The Turnaround Story
THE TURNAROUND STORY CAPITAL MARKETS DAY 2021 5
Slide 6: GEA in 2019 Internal snapshot
GEA in 2019 Internal snapshot • No P&L responsibility below EB level • Lack of accountability • Financial underperformance • Limited financial transparency • Key managers leaving the company • High staff turnover + • 7 profit warnings in a row • Stable & growing markets - • Leading market positions
Slide 7: GEA in 2019 External perception
GEA in 2019 External perception € 7 Profit warnings 60 „An uninvestable Start new stock (still) in our 50 management view. Share That's despite price August4th: (February 19, 2019) halving 38.13since € Oct`16 40 Share price: whilst the broader European industrial 30 €20.51 sector (SXNP) has gained 1
Slide 8: Five key drivers contributed to the turnaround
Five key drivers contributed to the turnaround We fully delivered on what we promised at the CMD 2019 New organization Headcount 800 Portfolio pruning Global NWC Increase operational optimization efficiency • 5 divisions / 17 Business 30.06.2019-31.12.2020 7 companies sold NWC/Sales: • Establish ONE
Slide 9: GEA has achieved an impressive turnaround
GEA has achieved an impressive EBITDA1 margin turnaround 16% and is back on track 14.8%2 14% 12.5-13.5% 13.9%2 13.4% 12.4-13.0% 12.8%2 12.4% 12% 11.4% 11.5% 11.2%2 10% 9.8% 9.8% 8% 6% 2015 2016 2017 2018 2019 2020 2021E 2022E 1 Before restructuring expenses 2 Pro forma EBITDA margin before restructu
Slide 10: We are fully on track to achieve our targets 2022
We are fully on track to achieve our targets 2022 Commitment at CMD 2019 Organic sales CAGR1 EBITDA margin1,2 NWC/Sales (2019-22E) 2.0%– 11.5%– 12.0%– 3.0% 13.5% 14.0% 2019 0.1% 2019 9.8% 2019 14.0% 2020 -2.6% 2020 11.5% 2020 7.9% 2021E 5-7% 2021E 12.4% - 13.0% 2021E 8-10% 1 Figures based on the ass
Slide 11: GEA's key customer industries food & beverages & pharmaceuticals
GEA’s key customer Demand for industries Food New Food Safety & food & beverages & Quality pharmaceuticals are very stable, Growing Middle reliable and growing Class Essential and thanks to global Affordable Medicines megatrends Growing World Population Sustainable Solutions Urbanization CAPITAL MAR
Slide 12: GEA's key customer industries: stable, reliable and growing
GEA’s key customer industries Production growth Industry volatility food & beverages & [CAGR 2000-2020 in %] [Standard Deviation 2000-2020 in %] pharmaceuticals Food & Beverages 3.6% 1.0% ~72% of GEA sales are very stable, Pharmaceuticals 4.8% 2.6% ~7% of GEA sales reliable and growing Agriculture,
Slide 13: GEA has a highly diversified customer base
GEA has a highly diversified customer base 100% Typical industrial company 80% Cumulative revenue share 60% GEA ~51% 40% ~45% ~38% 20% ~28% ~2% ~11% 0% Customers Top 1 Top 10 Top 50 Top 100 Top 150 Top 200 CAPITAL MARKETS DAY 2021 13
Slide 14: Mission 26
MISSION 26 CAPITAL MARKETS DAY 2021 14
Slide 15: Mission 26: Accelerating profitable growth
Mission 26: Accelerating profitable growth 2019 2026 • Self-help measures successfully implemented • Creating the basis for profitable growth CAPITAL MARKETS DAY 2021 15
Slide 16: Mission 26 Ambitious financial targets
Mission 26 Ambitious financial targets Organic sales CAGR1 EBITDA margin2 ROCE2,3 (2021E – 2026E) 4%-6% > 15% > 30% (FY 2021E: ~€4,650m)4 (FY 2021E: 12.4% - 13.0%) (FY 2021E: 23.0% - 26.0%) 1 Currency and portfolio adjusted 2 Before restructuring expenses; based on constant exchange rates 3 Capital
Slide 17: Engineering for a better world
Foundational elements of Mission 26 Our well-established Purpose… Engineering for a better world CAPITAL MARKETS DAY 2021 17
Slide 18: Our new Vision
Foundational elements of Mission 26 … and our new Vision We safeguard future generations by providing sustainable solutions for the nutrition and pharmaceutical industries CAPITAL MARKETS DAY 2021 18
Slide 19: Mission 26: Sustainability
Mission 26: Sustainability • Comprehensive ESG strategy • Greenhouse gas emission neutral since 2021 • Net zero by 2040 – interim targets validated by Science Based Targets initiative (SBTi) CAPITAL MARKETS DAY 2021 19
Slide 20: Mission 26: Innovation & Digitalization
Mission 26: Innovation & Digitalization • Clear innovation strategy • Significant increase of R&D spend • Bundle digital competencies under new Chief Digital Officer CAPITAL MARKETS DAY 2021 20
Slide 21: Mission 26: New Food
Mission 26: New Food • GEA – the enabler of the New Food industry • Uniquely positioned as a complete line provider • New Food consumption to triple by 2030 CAPITAL MARKETS DAY 2021 21
Slide 22: Mission 26: Sales Excellence
Mission 26: Sales Excellence • Fully leverage the potential of the region & country (R&C) organization • Optimize route-to-market • Manage performance CAPITAL MARKETS DAY 2021 22
Slide 23: Mission 26: Service Excellence
Mission 26: Service Excellence • Grow installed base coverage • Taking the blueprint of best-in- class Business Units as a role model • Expand recurring revenue streams to subscription based business models CAPITAL MARKETS DAY 2021 23
Slide 24: Mission 26: Operational Excellence
Mission 26: Operational Excellence • Continue transition to Nur rechts bild, nicht ueber best-in-class procurement den gesamten Bildschirm • Further optimize production Neues Bild footprint • Rollout of the factory of the future program CAPITAL MARKETS DAY 2021 24
Slide 25: Mission 26: Acquisitions
Mission 26: Acquisitions • Actively screening market opportunities • Financial guardrails defined for value accretive transactions • Healthy balance sheet enables external growth CAPITAL MARKETS DAY 2021 25
Slide 26: Mission 26 overview of six pillars
Innovation & Sales Operational Digitalization Excellence Excellence Service Sustainability New Food Excellence Acquisitions CAPITAL MARKETS DAY 2021 26
Slide 27: Dr. Nadine Sterley, Chief Sustainability Officer
Dr. Nadine Sterley, Chief Sustainability Officer − At GEA since July 2016 − Studied Law in Rostock, Germany, and Gothenburg, Sweden, and holds a PhD in Law − More than 10 years of work experience, since April 2021 senior management position with focus on sustainability CAPITAL MARKETS DAY 2021 27
Slide 28: Sustainability Strategy
DR. NADINE STERLEY, CHIEF SUSTAINABILITY OFFICER SUSTAINABILITY STRATEGY CAPITAL MARKETS DAY 2021 28
Slide 29: We engineer
We engineer CAPITAL MARKETS DAY 2021 29
Slide 30: We engineer sustainable solutions
We engineer sustainable solutions CAPITAL MARKETS DAY 2021 30
Slide 31: We engineer sustainable solutions responsibly
We engineer sustainable solutions responsibly CAPITAL MARKETS DAY 2021 31
Slide 32: ...responsibly with great people
We engineer sustainable solutions responsibly with great people CAPITAL MARKETS DAY 2021 32
Slide 33: ...with great people for a better world
We engineer sustainable solutions responsibly with great people for a better world CAPITAL MARKETS DAY 2021 33
Slide 34: We engineer sustainable solutions responsibly with great people
We engineer SUSTAINABLE SOLUTIONS RESPONSIBLY WITH GREAT PEOPLE FOR A BETTER WORLD We develop environmentally We foster environmental We are the employer of choice We create societal value sustainable solutions, enabling excellence and highest in the engineering industry by through solutions aimed c
Slide 35: Our pathway to ESG leadership
Our pathway to ESG leadership Engineering for a better world Sustainable Solutions − Reduce greenhouse gas emissions scope 3 by 18% by 2030 − 100% of solutions will be offered with zero freshwater-use by 2030 − 100% of packaging-related solutions use sustainable packaging materials by 2030 − 100% of
Slide 36: Sustainable Solutions
Sustainable Solutions Zero freshwater solution Enabler of sustainable packaging Zero water dairy processing plant GEA FoodTray − Milk consists of ~85% water − Saves up to 80% of plastic film compared to conventional food packaging − Reuse the water from the milk to minimize, if not eliminate, − Can
Slide 37: Net zero by 2040 pathway
Our pathway to ESG leadership Engineering for a better world NET ZERO by 2040 Sustainable Solutions Responsible Operations Employer of Choice − Reduce greenhouse gas emissions scope 3 − Reduce greenhouse gas emissions scope 1 & 2 − 80% favorable rating on the question: “Would you by 18% by 2030 by 6
Slide 38: We aim for net zero by 2040
We aim for net zero by 2040 We are taking bold climate action supporting the global transition to a net zero economy CAPITAL MARKETS DAY 2021 38
Slide 39: Our sustainability journey is gathering pace
Our sustainability journey is gathering pace with strong commitments for the future Sustainability Reporting: Annual reporting of progress on all sustainability Constituent of DAX 1st standalone Signing of UN RT joining UNEP Validation SBTi targets 50 ESG at inception Sustainability Report Global Co
Slide 40: Innovation & Digitalization
STEFAN KLEBERT, CEO, & FREDERIEKE REINERS, PROJECT MANAGER CEO O FFICE INNOVATION & DIGITALIZATION CAPITAL MARKETS DAY 2021 40
Slide 41: Innovation strategy focused on four pillars
In 2020 we defined a clear innovation strategy focused on four pillars Environmental Modularization & New Food Digital Solutions Sustainability Configuration CAPITAL MARKETS DAY 2021 41
Slide 42: Product innovation accelerates growth
Product innovation accelerates growth 30% 2026E By 2026, the share of sales from products less 10% than 5 years old will 2021E increase from 10% now to about 30% CAPITAL MARKETS DAY 2021 42
Slide 43: Environmental Sustainability to contribute most to new product sales
Environmental Sustainability to contribute most to new product sales until 2026 Environmental Modularization & New Food Digital Solutions Sustainability Configuration 40 % 20 % 10 % 20 % CAPITAL MARKETS DAY 2021 43
Slide 44: Business Unit innovation targets for each pillar
Each Business Unit has defined individual innovation targets for each pillar Targeted sales ambition of new solutions1 … Business Unit BU1 BU2 BU3 BU4 BU5 BU6 BU7 BU8 BU9 BU10 BU11 BU12 BU13 BU14 BUn Legend: Growth Driver Environmental Sustainability New Food Digital Solutions Modularization & Confi
Slide 45: Additional R&D resources will accelerate growth
Additional R&D resources for project innovation will accelerate growth GEA will increase the R&D R&D spending (% of sales) spend in the next years by ~45% ~3.0 Furthermore, we will increase the allocation of spending invested ~2.6 into projects significantly: ~1.8 ~1.2 47% 61% 2021E by 2026E R&D spe
Slide 46: Our innovation strategy is already bearing fruit
Our innovation strategy is already bearing fruit Environmental Modularization & New Food Digital Solutions Sustainability Configuration CAPITAL MARKETS DAY 2021 46
Slide 47: Frederieke Reiners, Project Manager CEO Office
Frederieke Reiners, Project Manager CEO Office − At GEA since December 2020 − Studied Mechanical Engineering at RWTH Aachen University − 7 years of work experience as management consultant and project manager CAPITAL MARKETS DAY 2021 47
Slide 48: Environmental Sustainability focus: revolutionary solutions
With a strong Environmental Sustainability focus we invent new revolutionary solutions biosolids Granulator High-performance slicers Combined mechanical dewatering Special saw-tooth edge for involute Example Saving Potential1: Example Energy Saving and thermal drying for wastewater blades for high-q
Slide 49: Our innovation strategy is already bearing fruit
Our innovation strategy is already bearing fruit Environmental Modularization & New Food Digital Solutions Sustainability Configuration CAPITAL MARKETS DAY 2021 49
Slide 50: Our innovation strategy is already bearing fruit
Our innovation strategy is already bearing fruit Environmental Modularization & New Food Digital Solutions Sustainability Configuration CAPITAL MARKETS DAY 2021 50
Slide 51: GEA will leverage its digital capabilities to accelerate growth
GEA will leverage its digital capabilities to accelerate growth Digital Hub • Collaboration space(s) with customer-centric tools • Do, what should be done only once • Coordination of GEA digital strategy Digital Units GEA digital will focus on the digital • Development of division-specific digital c
Slide 52: Software solutions enable customers to manage their processes
With our software solutions Unified herd management we enable our customers to software to steer all major easily manage their processes functionalities on a dairy farm and our GEA equipment DairyNet, FT • Value Driver: Control of all important functions in a dairy farm, e.g. milking, feeding, repro
Slide 53: Our innovation strategy is already bearing fruit
Our innovation strategy is already bearing fruit Environmental Modularization & New Food Digital Solutions Sustainability Configuration CAPITAL MARKETS DAY 2021 53
Slide 54: Modularization & Configuration reduces complexity
Modularization & Configuration Improved productivity reduces complexity and boosts through an end-to- efficiency end sales and configuration process Configuration System Homogenizer, SFT Shifting business from engineer-to-order (ETO) towards configure-to-order (CTO) Value Driver: Application and cus
Slide 55: Ilija Aprcovic, CEO LPT
Ilija Aprcovic, CEO LPT − At GEA since July 2000 − Studied Chemical Engineering and holds an MBA − Over 30 years work experience holding various senior management positions within GEA over the past 15 years CAPITAL MARKETS DAY 2021 55
Slide 56: GEA - The Enabler for the New Food Industry
ILIJA APRCOVIC, CEO LIQUID & POWDER TECHNOLOGIES GEA - THE ENABLER FOR THE NEW FOOD INDUSTRY CAPITAL MARKETS DAY 2021 56
Slide 57: New Food
New Food Plant-based proteins Cell-based proteins Insect proteins Plant-based Plant-based beverage Plant-based food Cell-based applications Precision fermentation intermediates CAPITAL MARKETS DAY 2021 57
Slide 58: Why do we need New Food?
Why do we need New Food? Need for proteins to feed the world Changing consumer preferences • World population to grow by another 800m • environmental concerns people until 2030 and global middle-class • animal welfare population to increase by almost 50% leading to significant increase in demand for
Slide 59: Food processors are reacting
Food processors are reacting "Sustainably produced plant-based seafood “(…) consumers can enjoy all the protein and alternatives can help to reduce overfishing and ‘meatiness’ of meat from a source that uses to protect the biodiversity of our oceans.” 97% less feed, 93% less water and 97% lower CO₂
Slide 60: Unique position as complete line provider
GEA has a unique position as a complete line provider owning all relevant technologies Exemplary Process Exemplary Processes: Cell-based Spray Mixing Sterilization Fermentation Separation proteins drying Plant-based Milling Extraction Formulation Extrusion Forming proteins GEA n n n n n n n n n n Co
Slide 61: Key processes for alternative protein processing
Key processes for alternative protein processing Pre- Ingredients Mixing Storage Sterilization Fermentation fermentation Concentration step Purification & Spray Powder handling Evaporation concentration Drying and filling Other downstream / post processing lines Concentration by filtration CAPITAL M
Slide 62: Novozymes: Enabling New Food production
Novozymes Enabling New Food production Solution • New greenfield plant to produce protein ingredients in the US • GEA delivers turnkey project engineering and process technology Customer benefit from our solution • Enable entry into advanced protein solutions • Help transform applied science into a
Slide 63: The Novozymes project from a technical angle
The Novozymes project from a technical angle Process steps GEA Technologies Pre-treatment Break down and Separation Filtration Heat Treatment and Filling CAPITAL MARKETS DAY 2021 63
Slide 64: New Food consumption to triple by 2030
New Food consumption to triple by 2030 New Food Consumption (€bn) >€120m 160 Order intake 2021E1 120 80 >€400m 40 0 2022 2024 2026 2028 2030 Order intake 2026E1 Plant-based proteins Cell-based proteins Source: GEA Market Intelligence, Various market reports 1 Newly developed machines plus existing m
Slide 65: Azam Owaisi, CEO North America
Azam Owaisi, CEO North America − At GEA since April 2021 − Has a degree in Electrical Engineering from the University of Illinois − 25+ years of work experience, including senior management and leadership positions in various US fortune 500 stock-listed companies, e.g. Danaher Inc. CAPITAL MARKETS D
Slide 66: Sales Excellence
AZAM OWAISI, CEO NORTH AMERICA SALES EXCELLENCE CAPITAL MARKETS DAY 2021 66
Slide 67: Accelerating new machine growth
Accelerating new machine growth • Regional organization allows GEA to leverage best practises and optimize local routes to market • Strategic plans developed bottom up with the region and business unit • Drives local commitment ownership and accountability • Localized stretched goals CAPITAL MARKETS
Slide 68: Establishing state of the art route-to-market and sales setup
We are well on track establishing a state of the art route-to-market and sales setup • Significant untapped potential worldwide • Underutilization of existing sales force • Unfavourable sales channel mix • Inadequate incentive systems • Past acquisitions were not integrated in GEA sales system CAPIT
Slide 69: Sales excellence lever: Route-to-Market
Two key levers for driving sales excellence at GEA: Route-to-Market 01 Route-to-Market (R2M) Optimization 02 Sales Excellence Enablers • Integrating all sales organizations into • Increasing organizational effectiveness Regions & Countries organization (R&C) by defining common sales roles and incent
Slide 70: Global addressable market defined for each Business Unit
Global addressable market defined for each Business Unit Route-to-Market (R2M) Optimization | Identifying white spots “BU exemplary” NCE DACH&EE NAM GREATER CHINA WE&MEA Regional market share LAM > 20% 10 - 20% <= 10% APAC Significant growth potentials for “BU exemplary” in NAM, Greater China & NCE
Slide 71: Tapping market potential through global sales network
Tapping market potential by leveraging GEA’s global sales network After Before Expected new machines sales CAGR 5% 21E – 26E Front line sales managers: GEA sales rep Agent (external) CAPITAL MARKETS DAY 2021 71
Slide 72: Sales excellence lever: Enablers
Two key levers for driving sales excellence at GEA: Enablers 01 Route-to-Market (R2M) Optimization 02 Sales Excellence Enablers • Integrating all sales organizations into • Increasing organizational effectiveness Regions & Countries organization (R&C) by defining common sales roles and incentive sys
Slide 73: Group wide sales playbook
GEA has developed a group wide sales playbook to boost sales effectiveness Initiative Toolbox Initiative 1: Development of KPI dashboards Efficiency Effectiveness Initiative 2: Further development of CRM system Growth Initiative 3: Optimized incentive systems Customer satisfaction Per initiative, th
Slide 74: Sales dashboards supporting performance steering
Sales dashboards supporting performance steering of sales force KPI dashboards Div 1 Div 2 Div 3 Div 4 Div 5 CAPITAL MARKETS DAY 2021 74
Slide 75: Established CRM platform adding value to sales & service
Established CRM platform adding value CRM & Digitalization to sales & service processes • One global template for all sales, Example of service today service and marketing processes • Core functionalities rolled out to all • Standardized one face to the GEA entities worldwide customer approach • CRM
Slide 76: Initiatives driving sales excellence rolled out globally
Initiatives driving sales excellence elaborated, proven and currently rolled out globally! Matrix: initiatives affecting pillars – by country (cluster) No. Name Pillars affected BU Exemplary 1 ✗ ✗ ✗ ✗ ✗ ✗ ✗ 2 3 ✗ 4 ✗ ✗ ✗ 5 ✗ 6 7 8 9 ✗ ✗ 10 11 12 ✗ ✗ ✗ ✗ ✗ ✗ ✗ 13 14 15 16 17 18 ✗ 19 ✗ ✗ ✗ ✗ Efficienc
Slide 77: BU Exemplary: Detailed measures per country
Business Unit Exemplary: Detailed measures per country defined to grow above market BU Exemplary CAGR Country cluster 2021-2026 DETAILS CAGR 4.2% 1 Cluster 1 4.3% 1 Cluster 1 439 2 Cluster 2 2 Cluster 2 4.8% 3 Cluster 3 4 Cluster 4 3 Cluster 3 5.0% 360 5 Cluster 5 6 Cluster 6 4 Cluster 4 5.2% 7 Clus
Slide 78: Sales incentive schemes focused on performance KPIs
Sales incentive schemes focused on performance KPIs with a strong variable pay component Sales Incentive System • No uniform program before 2020 Sales incentive performance program • Program launched in 2020 Order intake Global uniform • Focus on annual financial KPIs financial and Gross margin • Sp
Slide 79: Accelerating growth and optimizing selling expense ratio
Accelerating growth and optimizing selling expense ratio Strongly accelerating new machines sales New machines sales (€m) Selling expense1 (% of total sales) growth by 12.4 11.7 11.3 11.5 11.6 • improving route-to-market 3,338 ~3,170 CAGR • developing sales optimization tools Target 4%-5% corridor 2
Slide 80: Dr. Armin Tietjen, Chief Service Officer SFT
Dr. Armin Tietjen, Chief Service Officer SFT − At GEA since 2007 − Studied Agriculture and having a PhD in Agriculture Economics − Different assignments including Head of a Business Unit and Senior Vice President Product Engineering & Development CAPITAL MARKETS DAY 2021 80
Slide 81: Service Excellence
DR. ARMIN TIETJEN, CHIEF SERVICE OFFICER SEPARATION & FLOW TECHNOLOGIES SERVICE EXCELLENCE CAPITAL MARKETS DAY 2021 81
Slide 82: Service is a resilient and highly profitable business
Service is a resilient and highly profitable business at GEA Service sales (€m) Service share (%) CAGR 2.3% ~34 ~1,600 33.6 1,574 1,559 32.3 1,490 30.9 2018 2019 2020 2021E 2018 2019 2020 2021E CAPITAL MARKETS DAY 2021 82
Slide 83: Performance analysis shows potential for further growth
Our performance analysis reveals significant potential for further growth 100 Service Coverage 90 Percentage of installed equipment in operation served by GEA 80 Share of Wallet (%) 70 Share of Wallet 60 Amount existing customers spend for service on GEA machines in 50 relation to the potential serv
Slide 84: Service performance varies significantly between BUs
Today’s service performance varies significantly between BUs and therefore shows solid growth potential Low performer High performer 28% - 55% 21% - 71% 46% - 85% Service coverage 3% - 10% 5% - 34% 24% - 53% Service FTE/Total FTE 60 40 Service sales share (%) 20 0 Global presence Comment Installed b
Slide 85: Path to organic service CAGR of 5%-6% until 2026
Our path to deliver organic service CAGR of 5%-6% until 2026 2026 − Increase service coverage Recurring Revenue − Increase share of wallet − Increase recurring Operational Service Recurring Service sales Excellence Operational Service Base Service Excellence Base Service 2021 − Performance benchmark
Slide 86: Operational Service Excellence maturity per Business Unit
Maturity of service business per Business Unit Great potential for further service sales growth Business Unit 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 „White spots“ Product Digital LOW Base Service Pricing maturity Place Personnel MEDIUM Process Management maturity Promotion Service Operations Serv
Slide 87: Base Service as prerequisite for growth
Base Service – prerequisite for being a top performer in service business and enabler for growth Focus Area Ambition Active product portfolio management determined by financial Products objectives in all Business Units Digital Each machine served is ready for digital services Base Service Establish
Slide 88: Operational Service Excellence ensures efficient growth
Operational Service Excellence – ensures an effective and efficient service business growth Focus Area Ambition Service Managing growth w/o additional personnel in administrative Operations functions until 2026 Field Service Continuous productivity gains (min. 3% p.a.) until 2026 Operational Service
Slide 89: Recurring Service offers predictable revenue streams
Recurring Service – offers predictable revenue streams and profitable customer interaction Focus Area Ambition Service Level By 2026 50% of the machines installed will be sold Agreements with minimum a SLA Recurring Service Digital All core products of GEA will be offered with condition monitoring a
Slide 90: Firm Service Initiatives roadmap 2022–2026
Firm Service Initiatives roadmap 2022–2026 for each medium maturity level BU is a balanced combination of all 3 activity fieldsExample Service Level Agreements Service Level Agreements New Business Models Roll out modular SLA approach in all Start with Equipment as Service products Launch order plat
Slide 91: Making service a more predictable and profitable revenue stream
Making service business a more predictable and profitable revenue stream Transforming service Service sales (€m) Service share (%) Service Coverage (%) Share of Wallet 1 (%) business from incident driven to subscription based ~64 ~36 ~62 Increasing recurring and ~34 scheduled service ~55 ~54 part
Slide 92: Klaus Stojentin, CEO SFT
Klaus Stojentin, CEO SFT − At GEA since May 2003, Division CEO since November 2019 − Studied Energy and Power Supply Engineering − Over 30 years work experience holding various senior management positions within GEA over the past 18 years CAPITAL MARKETS DAY 2021 92
Slide 93: Separation & Flow Technologies
KLAUS STOJENTIN, CEO SEPARATION & FLOW TECHNOLOGIES SEPARATION & FLOW TECHNOLOGIES CAPITAL MARKETS DAY 2021
Slide 94: Separation & Flow Technologies: Further growing from a strong base
Separation & Flow Technologies Further growing from a strong base Sales share3 EBITDA share1,3 26% 48% Strategic focus • Develop New Food applications • Technological leadership ROCE1,3 Market position • Drive top-line growth with focus on NAM, LAM and APAC 23.0% #1–2 • Optimize cost structure and e
Slide 95: Well positioned for Mission 26
Well positioned for Mission 26 Growth opportunities Technology leadership Market coverage & organizational efficiency We grow strongly in New Food We combine our process test centers We have a good market coverage, applications. High demand for liquid bio- and employees’ application know-how further
Slide 96: Setup for growth: New Food
Setup for growth Sales CAGR1 2021E -2026E: ~ 15% New Food Main growth driver Technology • Healthy diets • New decanter series: Pro & Prime • New food (such as plant-, • Ariete Homogenizer Series fish-, cell-based and insect proteins, ingredients) Market position GEA’s unique position • Leading playe
Slide 97: Setup for growth: Pharma
Setup for growth Sales CAGR1 2021E -2026E: ~ 10% Pharma Main growth driver Technology • Liquid bio-pharma • New separator series: aseptic / pure • New and existing vaccines, • New single use separator kytero® blood fractionation, • Lab Homogenizer Xstream fermentation broth • Valves series VESTA sep
Slide 98: Resilient business: Dairy
Resilient business Sales CAGR1 2021E -2026E: ~ 4% Dairy Main growth driver Technology • Increasing urbanization • With our leading technological solutions • Growing population and unique application know-how we • New snacks, e.g. protein bars can create great value for our customers • Small, but pow
Slide 99: Growing through innovations
Growing through innovations Biobased Chemicals - Sustainable Separator Biopolymers • Necessity for plastic alternatives is • Less driving power at same increasing (e.g. apparel, automotive, separation efficiency level etc.) • Savings between 25% and 45% of • Transformation of biomaterial into energy
Slide 100: GEA kytero Single Use Pharma Centrifuge
GEA kytero® Single Use Pharma Centrifuge Friction free Maximum cell drive harvesting All our competence in a single-use skid Batch- No SIP ready in No CIP 10 minutes Sterilization-in-Place/ Cleaning-in-Place GEA kytero® is registered as a trademark in several countries worldwide. CAPITAL MARKETS DAY
Slide 101: Growth through digital evolution
Growth through digital evolution To be even closer to our customers Connectivity Apps Sales Tools / Intelligent Remote E-commerce Equipment Services GEA IO provides complete Smart apps empower our The digitization of our Advanced analytics in GEA‘s virtual laboratory machine data online. sales and s
Slide 102: Realizing further margin upside: service growth
Realizing further margin upside Service growth: Increasing iBase coverage • Growing new machines sales increase the installed base • Investments in market coverage shall increase the capture rate • Focus on Service Level Agreements (recurring revenue) instead of on-demand-services • Digital services
Slide 103: Realizing further margin upside: operational excellence
Realizing further margin upside Operational Excellence: Reducing the cost base • Driving automatization and digitalization to continuously improve productivity & throughput time • Standardization & modularization as key drivers to reduce complexity in engineering, production and procurement • Furthe
Slide 104: Acceleration of profitable growth and margin improvements
Acceleration of profitable growth and further margin improvements Sales (€m) EBITDA1 margin (%) 23.4 • Capturing growth 21.7 Target 2026: opportunities especially in 24% – 26% New Food applications ~1,250 1,175 • Launching new innovative CAGR and ecologically friendly 4%-5% product generations • Gro
Slide 105: Liquid & Powder Technologies
ILIJA APRCOVIC, CEO LIQUID & POWDER TECHNOLOGIES LIQUID & POWDER TECHNOLOGIES CAPITAL MARKETS DAY 2021
Slide 106: Liquid & Powder Technologies: Well positioned for New Food growth
Liquid & Powder Technologies Well positioned to benefit from New Food growth Sales share3 EBITDA share1,3 36% 23% Strategic focus • Drive growth through development of new applications, such as New Food • Innovation in sustainable solutions ROCE1,3 Market position • Drive profitability through conti
Slide 107: Creating a strong base to restart the business
Creating a strong base to restart the business EBITDA1 margin (%) Right size the division 9.2 7.72 Complete poor performing projects Management 7.2 change 5.32 Project management processes 5.0 Engineering efficiency EBITDA accountability 2017 2018 2019 2020 2021E 1 Before restructuring 2 Pro forma f
Slide 108: Financial Performance: solid foundation to accelerate growth
Starting now from a solid foundation to accelerate growth and improve margin further Financial Performance 2024 Growing the business − Adapting to changing customer 2022/24 Building on strength requirements − Commitment to sustainability objectives − Focusing on growth 2019/21 Creating strong base −
Slide 109: Capturing profitable growth
Capturing profitable growth Establishing New Food as core application Growth Driving sustainable solutions Enhancing digitalisation Focusing on process excellence Profitability Growing service share CAPITAL MARKETS DAY 2021 109
Slide 110: Growing the business
Growing the business Establish “New Food” as Driving sustainable Enhancing core application solutions digitalisation − Establishing biotech center of Enabling our customers to meet − Improving standard automation competence and “New Food” their sustainability targets for: platform R&D center − water
Slide 111: New Food, an increasingly important future market
New Food, an increasingly important future market Alternative “GEA to build world's first pilot plant for the production of krill protein” protein GEA Press Release July 28, 2021 “GEA is commissioned by leading French dairy and Plant-based beverage producer to build a plant for processing beverages
Slide 112: Leading with Sustainability
Leading with Sustainability Partnering with “GEA technology to take center stage in customers carbon-neutral smoothie factory” GEA Press Release May 19, 2020 “Getting tough on industrial Developing emissions with CO2 abatement and technologies carbon capture technologies” GEA.com Story August 9, 202
Slide 113: LPT Digital Ambition
LPT Digital Ambition Data & Analytics Smart Applications Connected Services Example products Example products Example products GEA InsightPartner GEA OptiPartner GEA Codex® Remote Support Software that monitors a plant’s Software that combines GEA’s Enables contact with GEA performance and provides
Slide 114: Increasing profitability
Increasing profitability Process Service excellence Enhancing Digitalisation − Sales processes − Increase our coverage rate − Project management − Growing digital service offering − Engineering − Extending service products − Expanding local competencies CAPITAL MARKETS DAY 2021 114
Slide 115: Implementing state of the art project management
Implementing state of the art project management Project management Project governance Project manager model capabilities − Improving sales & project − Strict adherence to project − Project manager career & management interface management model training path defined − Global roll-out of project − Fo
Slide 116: Service as a lever for higher profitability
Service as a lever for higher profitability LPT Service: Combining GEA expertise with advanced tools Vision Strategy 1 2 Grow the Grow digital market service Build, maintain, and improve … … customer performance… coverage offering 3 4 Grow Increase organisational operational maturity excellence … th
Slide 117: Making LPT a double-digit margin business
Shifting gears towards profitable growth and making LPT a double-digit margin business Sales (€m) EBITDA1 margin (%) 10-12 • Capturing growth ~1,600 opportunities especially in New Food applications CAGR 9.2 4%-5% • Growing service sales • Best in class project management implementation partner • Gr
Slide 118: Johannes Giloth, COO
Johannes Giloth, COO − At GEA since January 2020 − Holds Master degrees in Business Administration and Engineering − 20 years of work experience, including senior management positions in the area of procurement, logistic and production in various companies like Nokia CAPITAL MARKETS DAY 2021 118
Slide 119: Operational Excellence
JOHANNES GILOTH, COO OPERATIONAL EXCELLENCE CAPITAL MARKETS DAY 2021 119
Slide 120: Global Operations is the engine driving profitability
Global Operations is the engine driving profitability for GEA Resilient operating model €2.8bn spend Sustainable + operations Delivering value with €0.4bn Best-in-industry value add 6,300+ expertise (production) FTEs Procurement Production Supply Chain Executional Excellence CAPITAL MARKETS DAY 2021
Slide 121: Operations made significant progress since last CMD
Operations made significant progress since last CMD One Global Procurement organization with 700+ FTEs across the matrix Spend analytics and supplier management across 67 ERP systems Operations community with global governance & policies Production productivity program with 400+ initiatives Manufact
Slide 122: Strong execution across operations to achieve CMD targets
Strong execution across operations to achieve CMD 19 targets Target Status / Forecast 351 ✓ 2021E Procurement net savings, €m 34 …………………………. 2023E Moved production hours2, k ~545 …………………………. >1,000 BCC production hours, percent 33 …………………………. 33 Production net savings, €m 30 …………………………. 37 + Reduced
Slide 123: Driving GEA's operational success
Driving GEA’s operational success Reduce Enable cost base further growth • Efficient operations • Customer-centricity • Countering price erosion and • Resilience and flexibility cost increases • Product cost optimization • Gaining market share through cost competitiveness CAPITAL MARKETS DAY 2021 12
Slide 124: Five levers will transform GEA's operations
A comprehensive program around five levers will transform GEA’s operations Value delivery Digitalization & People & Customer- Commitment to through TCO technology organizational centricity sustainability leadership excellence CAPITAL MARKETS DAY 2021 124
Slide 125: Driving transition to best-in-class procurement
Driving transition to best-in-class procurement Core programs Impact 2022E – 2026E Supplier management & sustainability €90m procurement contribution (including pass through of raw Digital procurement and material price inflation) organization effectiveness + Design-to-value +15 payment days Project
Slide 126: Supplier management case study: logistics cost optimization
Supplier management case study: Logistics and warehousing cost optimization Context Actions Impact • Logistics and warehousing represents • Global category management, driving • Despite rising logistics rates, GEA a substantial share (5+%) of the total optimization of logistics processes lowered log
Slide 127: Design-to-value: scaling product excellence
Design-to-value: Building on initial success cases, we will scale product excellence at GEA CASE EXAMPLE Building foundation of product excellence Automated Milking Systems • Cross-functional collaboration TCO improvement along material cost, (Engineering, Procurement and Sales) manufacturing, logis
Slide 128: Transforming GEA's production
Transforming GEA’s production Core programs Impact 2022E – 2026E €60m Production network net impact to optimization EBITDA + GEA production system & >95% productivity initiatives on-time delivery Factory of the Future -60% - Digitalization Scope 1 & 2 CO2e - Automation emissions (by 2030) - Sustaina
Slide 129: Production network transformed along 6 design principles
GEA’s production network will be transformed along 6 design principles Core competence Resilience Cost competitiveness Local for local Growth Sustainability Americas Western Europe Eastern Europe APAC • Local for local growth • Cross-utilize sites • Expand multipurpose sites • India multipurpose sit
Slide 130: Factory of the Future concept
Factory of the Future concept will provide tailored roadmaps for each plant Digital and technological levers and use cases based on factory archetypes PLANT CONFIGURATOR ENGINEER TO ORDER CONFIGURE TO ORDER PROJECTS SELECTOR Digitalization Automation Sustainability OELDE BÜCHEN BÖNEN SÖBORG KITZINGE
Slide 131: Case study: advanced robotics at Büchen
Case study: advanced robotics at Büchen driving cost competitiveness and growth Context Example use case Automated loading of valve housings at Büchen Büchen specializes in manufacturing core components in highly automated production lines Product: valves and pumps 35+% 50+% 85+% 40+% increase in re
Slide 132: Supply Chain to deliver customer excellence
Supply Chain to deliver customer excellence Core programs Impact 2022E – 2026E Supply chain operating model -30% Customer delivery lead times1 Supply chain distribution network optimization + Performance, sustainability & compliance -10 inventory days Digital supply chain 1 On selected product areas
Slide 133: Global Operations will continue to deliver substantial impact until 2026
Global Operations will continue to deliver substantial impact until 2026 Cost savings Cash Performance Net working capital improvement through… -30% Customer delivery lead times2 >€150m1 +15 >95% Payment days1 On-time delivery -10 -60% Inventory days1 Scope 1 & 2 CO2e emissions (by 2030)3 1 2021 bas
Slide 134: Marcus A. Ketter, CFO
Marcus A. Ketter, CFO − At GEA since May 2019 − Studied Economics and earned an MBA at Columbia Business School − 25+ years of work experience, including senior management and CFO positions in various stock-listed companies CAPITAL MARKETS DAY 2021 134
Slide 135: Financial Ambition 26
MARCUS A. KETTER, CFO FINANCIAL AMBITION 26 CAPITAL MARKETS DAY 2021 135
Slide 136: Turnaround accomplished
Turnaround accomplished EBITDA1 (€m) ROCE1 (%) Net working capital (€m) EBITDA1 margin Net working capital/sales ratio (%) 800 25.0 Increased financial 12.4%-13.0% 600-630 transparency 23%-26% 747 700 682 20.0 11.2%2 11.5% Improved margin 5392 600 9.8% 532 − Reduced headcount 15.5 479 − Better proje
Slide 137: Fully on track to achieve CMD 2019 targets
Fully on track to achieve our CMD 2019 targets for 2022 … Improvement measures Operating Footprint Procurement Sales efficiency optimization consolidation efficiency increase Estimated P&L impact until ca. €50m ca. €5m ca. €35m ca. €15m FY 2021 To go €0m ca. €5m ca. €15m ca. €25m CMD 2019 target P&L
Slide 138: Overachieve EBITDA margin targets in 2021
… and to (over)achieve the EBITDA1 margin targets already in 2021 2021E 12.4% – 13.0% ~11.9% ~9.6% ~9.2% ~10.0% ~23.4% 1 Before restructuring expenses CAPITAL MARKETS DAY 2021 138
Slide 139: Financial ambition 26 – The next level
Financial ambition 26 – THE NEXT LEVEL Sales (€m) EBITDA1 margin (€m) ROCE1 (%) CAGR 4%-6% ~€6.0bn >15% >30% ~€4.65bn2 23%-26% 12.4%-13.0% • Accelerating sales growth • Reaching new margin level • Outstanding capital return 2021E 2026E 2021E 2026E 2021E 2026E 1 Before restructuring expenses 2 Estima
Slide 140: Accelerating sales growth and driving margin to new record level
Accelerating sales growth and driving margin to new record level Sales EBITDA1 margin 5%-6% ~1.5% -~1.5% 4%-5% CAGR ~€6.0bn CAGR ~1.0% -~2.0% Increasing share of wallet >15.0% ~€4.65bn2 Better iBase penetration ~2.0% Launching new services 12.4% Sales Excellence - New Food ~1.5% Innovations 13.0% 20
Slide 141: Expected restructuring expenses impact
Expected restructuring expenses impact on EBITDA and cash-flow (€m) 284-314 P&L impact P&L impact • In-line with CMD 2019 • Mainly manufacturing 204-234 restructuring guidance footprint related (€210m – €250m) Restructuring ends in + • 130-150 130-150 2026 • ~€60m portfolio pruning related restructu
Slide 142: The next level EBITDA margin targets 2026
THE NEXT LEVEL EBITDA1 margin targets 2026 Sales CAGR2 EBITDA1 margin 4.0% - 6.0% >15.0% 5.5% - 6.5% 14.0% - 16.0% 5.0% - 6.0% 12.0% - 14.0% 4.0% - 5.0% 10.0% - 12.0% 4.0% - 5.0% 13.0% - 15.0% 4.0% - 5.0% 24.0% - 26.0% 1 Before restructuring expenses; 2 2021E – 2026E CAPITAL MARKETS DAY 2021 142
Slide 143: Strong free cash-flow generation
Strong free cash-flow generation … Free Cash-Flow (€m) • Stable net working capital ~2,000 to sales ratio 8%-10% 626 • Disciplined Capital Expenditure: about €200m per year until 2026 342 • Strong free cash-flow generation of ca. €2.0bn until 2026 2019 2020 2021E 2022E 2023E 2024E 2025E 2026E CAPITA
Slide 144: Attractive shareholder returns
… allows for attractive shareholder returns … Capital Allocation (2022E-26E) Share buyback program ca. €170m (€300m in total) Attractive dividend payouts Shareholders will benefit from sustainable dividend increases Net cash position Used efficiently while committed to investment grade rating CAPITA
Slide 145: … and for external growth
… and for external growth Strategic M&A Guardrails Financial Imperatives – Strengthening application portfolio – Best owner / operator of assets – Enhancing service business – Leveraging synergies – Filling white spots – Value accretive – Access to adjacent / new technologies – Enabling sustainable
Slide 146: Leverage – Room for growth
Leverage – Room for growth • Strong commitment to investment Leverage (x EBITDA) grade rating 3.6 3.0 • Moody’s gross leverage includes 2.7 pension and lease liabilities but 2.3 excludes cash • Financial net leverage excludes 0.2 pension and lease liabilities and -0.1 includes cash -0.9 -0.8 2018 20
Slide 147: Cash Conversion Ratio
Cash Conversion Ratio – Solid cash generation • Cash conversion ratio (before Cash conversion ratio (%) restructuring): FCF/EBITDA 127 • High cash conversion rates in 2019 and 2020 driven by strong reduction 77 Target range: 55 - 65 of net working capital • Setting target for cash conversion ratio a
Slide 148: globalSAP on track
globalSAP on track: Supporting THE NEXT LEVEL targets Elimination of all unsupported ERP systems Phase 1 Elimination of all non-SAP systems Phase 2 Template Full Template Release 1 (Release 2) finalized finalized Full S/4 HANA rollout Phase 3 Design & Build S/4HANA Prepare & Mobilize Design & Build
Slide 149: Significant shareholder value creation until 2026 and beyond
Significant shareholder value Shareholders will benefit creation until 2026 and beyond from sustainable dividend Dividend payout2 (€m) increases Dividend per share (€) >0.85 0.30 0.40 0.55 0.55 0.60 0.70 0.80 0.80 0.85 0.85 0.85 0.85 STOXX TMI +62.0% +57.0% GEA TSR1 154 153 153 153 153 153 MDAX 135
Slide 150: Closing Remarks
STEFAN KLEBERT, CEO CLOSING REMARKS CAPITAL MARKETS DAY 2021 150
Slide 151: Shift from self-help measures to profitable growth
Shift from self-help measures to profitable growth Service New Food Excellence Sustainability Innovation & Digitalization Accelerating Growth & New organization Profitability Acquisitions Headcount 800 Increase Operational Sales operational Excellence Excellence efficiency Self-help measures Global
Slide 152: GEA – a compelling investment
GEA – a compelling investment Leading positions in attractive and growing Food, Beverages and Pharma markets Well positioned to capture growth opportunities in New Food Technological leadership Strong commitment to sustainability Clear plan for profitable growth Strong cash generation allows sustain
Slide 153: Engineering for a better world
| Engineering for a better world.
GEA Group Aktiengesellschaft — Investor Day (September 2021) on 6ix