Germany: GEA to put under scrutiny low margin divisions

GEA Group, one of the largest suppliers of process technology for the food and beverage industry with annual revenues of € 4.6 billion in 2017, is putting under scrutiny all parts of the company in order to fight weak results. The group, which is headquartered in Düsseldorf, Germany, presented on Tuesday preliminary results with an expected operating EBITDA of approximately EUR 565 million in 2017, which is well below the guided target range communicated in July 2017of between EUR 573 million and EUR 633 million. Reasons were inter alia additional costs of roughly €20 million for bottling lines, which did not meet the requirements of the clients and €5 million due to changes in exchange rates

GEA said “the group expects the challenging market environment to continue, in particular in the dairy processing and beverage industries.” The food and beverages sector is of major strategic importance of GEA and accounts for around 70 percent of the business

Jürg Oleas (60), since 2004 Chairman of the Executive Board, told investors in a phone conference the following day that GEA will carry out a strategic review and will examine in detail all divisions of the business with below-average margins accounting for several hundred millions of euros in annual revenues. Details of the review will be revealed at an investor’s conference on March 12, 2018, together with the audited consolidated financial statements 2017 and the ultimate outlook for the 2018 fiscal year.

GEA Group was founded in 1920 as Gesellschaft für Entstaubungsanlagen to produce de-dusting equipment. In 1989, GEA went public and an era of expansion and globalization started with several acquisitions in the early 1990s including Grasso, Niro, Westfalia Separator and Tuchenhagen. In 1999, Metallgesellschaft acquired GEA and in 2000 was renamed to mg technologies. After reorganization and certain divestments the company was renamed into GEA Group in 2005. In 2015 the group implemented a new integrated group structure embracing the two business areas “Equipment” and “Solutions” as well as uniform country organizations. Since then the technology portfolio was further expanded by acquiring CMT, Comas, Hilge and Imaforni.

 

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