Agro Perspectiva

GEA resilient in a challenging environment

15.03.2010 12:58 "Agro Perspectiva" (Kyiv) — GEA Group Aktiengesellschaft closed the 2009 fiscal year with a sound result. In a challenging global macro-economic environment the company’s order intake fell by 18.1 percent and revenue fell by 14.8 percent, respectively, which is distinctly less than the industry-average. Net of EUR 65 million restructuring expenses EBITDA decreased by 26.0 percent. In light of the adverse business climate, EBIT of EUR 268.2 million (EUR 333.2 million before restructuring expenses) can well be described as a great success. Another gratifying aspect is that the discontinued operations no longer burdened the Group’s earnings. «Given the general situation of the world economy, it is understandable that we were not capable of matching the prior-year record marks in terms of revenue and EBIT margin. But by taking the right initiatives early on to counter these conditions, combined with consistent margin orientation and a clear focus on cash management, our EBIT margin before restructuring expenses only dropped by 218 basis points and we managed to turn a net debt into a positive net liquidity. After seven recessionary quarters, our order intake in Q4 2009 outperformed the preceding quarter by 5 percent. This success is essentially attributable to the commitment of GEA’s workforce. The company will therefore make an extraordinary payment of EUR 2.6 million in aggregate to all employees - with the exception of managers», announced Jürg Oleas, Chairman of the Executive Board of GEA Group Aktiengesellschaft. GEA adjusted its capacities by around 2,300 FTEs within the scope of the communicated action plan. This involved expenses of EUR 65 million. Already in 2009, these measures allowed savings in the amount of about EUR 100 million to be achieved. Adjusted for anticipated cash outflows relating to discontinued operations (EUR 199 million), GEA could improve its net liquidity by EUR 306 million. At the end of the fiscal year the net liquidity amounted to EUR 47 million as a result. As of the reporting date, liquid funds of EUR 492 million as well as unutilized credit lines in the amount of EUR 949 million were available. In September 2009, the Executive Board and Supervisory Board resolved upon a completely new segmentation of the Group in order to enhance GEA’s business development potential. This reorganization will leverage substantial synergies, specifically in the areas of sales, sourcing and production. GEA started the communication and implementation of individual measures in 2010. For 2010, GEA anticipates a moderate increase in order intake, a corresponding stabilization of revenue and hence a margin level at least matching FY 2009. However, it is expected to take two to three years for the effects of the global financial and economic crisis to be overcome in all segments and at the Group as a whole. In fact, it remains to be seen how the countries which are important national markets for GEA cope with their heavily increased debt without implementing spending cuts that could slow their economic recovery. In consideration of the initiated measures to reduce complexity, GEA in the long term targets a sustainable EBIT margin of 12 percent over the cycle.