GEA Group AG

Earnings Release • Mar 12, 2009

News Details

Corporate | 12 March 2009 07:30

GEA Group Aktiengesellschaft: GEA prepared for 2009 market trends

GEA Group Aktiengesellschaft / Final Results/Dividend

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* EBIT up by 25.7 percent to EUR 504.2 million in 2008
* EBIT margin improved to 10.4 percent in core segments
* Earnings per share from continuing operations up by 50 percent to EUR
1.89
* Dividend doubled to EUR 0.40
* Order intake in the first two months of 2009 significantly better than
the German mechanical engineering industry

Bochum, March 12, 2009 - GEA Group Aktiengesellschaft concluded a
challenging 2008 with record Group earnings before interest and tax (EBIT)
of EUR 504.2 million. This result reflects a marked increase in the Group
margin of 148 basis points and 9.7 percent, and a further increase in
revenue of 6.7 percent. At 10.4 percent, the EBIT margin on the core
business significantly exceeded the target level of 10 percent. The daily
input of the Group's employees forms the key foundation for the overall
success of the company. This is why all employees, excluding the senior
management, will receive an extraordinary profit participation bonus of
around 1 percent of earnings before tax (EBT) 2008.

'In 2008, our mechanical engineering business achieved revenue of over EUR
5 billion for the first time. Naturally, we also started to take steps in
2008 to counter the decline in earnings anticipated from the general
economic trends. I regard the further development and implementation of
measures to secure our business performance as the key tasks for all GEA
managers in 2009,' commented Jürg Oleas, CEO of GEA Group
Aktiengesellschaft. These measures include a cutback on overtime, temporary
help and short-term employment contracts, further flexibility with respect
to working hours, and short-time working. Layoffs among permanent employees
will also be implemented. Administration and sales costs will be adjusted
to reflect a drop in business volumes. Some locations have already been
closed or amalgamated in order to boost productivity. GEA has conducted a
further review of the investments in property, plant and equipment that
have been planned to date, or have either been postponed or entirely
cancelled, in order to adapt to the recession. Overall, from today's
perspective, the Executive Board anticipates restructuring expenses of up
to EUR 40 million in 2009.

Earnings remain our focus
The 8.0 percent decline in Group order intake in 2008 reflects a sharp drop
in volumes of major orders in the bioethanol/biodiesel and breweries. The
2007 fiscal year was characterized by two major power plant orders from
South Africa with a total volume of approximately EUR 340 million. The
Group's current order backlog reflects good margin quality, which is
particularly due to the fact that the high-margin components business in
the food manufacturing industry area has experienced stable business
trends. GEA will continue to proceed according to the principle of
preferring margin to volume in 2009. The comparative robustness of GEA's
sales markets is evidenced by the fact that the approximately 20 percent
decline in its January and February 2009 order intake was significantly
better than the drop registered by the German mechanical engineering
industry, which amounted to 42 percent in January according to the German
Engineering Federation (VDMA).

Healthy foundation
GEA's financial position remains stable. The Group has no short-term
refinancing requirement, and also has sufficient room for financial
maneuver for its future corporate growth. Cash flow from operating
activities reached EUR 388.9 million in 2008, on the basis of IFRS
accounting. The Group's net debt amounts to EUR 60.2 million, which
represents gearing of 4.1 percent. GEA Group has access to unrestricted
cash and overnight deposits of EUR 431.7 million. A marked reduction in
working capital will support the Group's operating cash flow in 2009.

Portfolio rationalization concluded
The five-year portfolio rationalization process has been concluded with the
closure of Ruhr-Zink at the end of the last business year. A total of 20
companies from the chemicals, automotive supply industry, plant
engineering, the steel and boiler construction as well as trading and zinc
smelting industries were either sold or closed over this period. Over the
same timeframe, GEA acquired 30 companies of which almost 80 percent
address the food manufacturing and beverages industries or the energy
sector as their main sales markets. This leaves GEA well positioned to
continue to grow in these comparatively stable markets.

Projects in discontinued operations to be delivered to customers in 2009
Besides the charges arising from the closure of Ruhr-Zink, the main items
requiring recognition in the annual financial statements were once again
significant expenses for legacy orders in the plant engineering business.
Prospectively, all remaining orders, where GEA Group is still exposed to
risk at both Lurgi and Lentjes, will nevertheless be delivered in 2009, and
will transfer to their warranty phases. Corresponding provisions were
already formed in 2008 for the cash outflows of EUR 350 million to EUR 400
million expected in 2009.

Dividend doubled for 2008, but lower business volumes expected in 2009
GEA foresees no recovery in the current economic situation in 2009, which
has prompted it to launch the measures described above. A reduction in the
outstanding result achieved in 2008 will prove unavoidable in 2009, in
terms of both volumes and margins. The current order backlog supports
earnings as a result of the good margins on the orders that have been
received. The order backlog has even risen slightly following the first two
months of 2009. On a longer-term view, and following a normalization of the
macroeconomic environment, the total Group EBIT margin should rise from
today's 9.7 percent to over 10 percent, allowing the distribution of a
dividend equivalent to around one third of Group net income. The Executive
and Supervisory Boards of GEA Group are proposing to the Annual General
Meeting the payment of a dividend of EUR 0.40 per share for the 2008 fiscal
year.

GEA Group consolidated data 2008
(EUR million) Q4 2008 2008

Order Intake
Energy and Farm Technology 1) 410.8 1,645.6
Process Technology 703.4 3,346.6
Other and consolidation -0.9 -8.3
Total 1) 1,113.3 4,983.9

Revenue
Energy and Farm Technology 529.6 1,818.6
Process Technology 904.2 3,338.1
Other and consolidation 4.1 22.3
Total 1,438.0 5,179.0

EBIT
Energy and Farm Technology 59.0 165.5
Process Technology 129.5 369.7
Other/ consolidation and Holding -11.3 -31.0
Total 177.1 504.2
% of revenue 12.3 9.7
Earnings before tax 166.0 458.8
Net income on continued operations 135.8 349.0
Net income/loss on discontinued operations -112.5 -248.0
Net income 23.4 101.0
Earnings per share on continued operations 2) 0.73 1.89
Earnings per share on discontinued operations 2) -0.61 -1.35
Earnings per share 2) 0.12 0.54
Net position 3)4) -60.2 -60.2
Capital expenditure 5) 72.2 165.6
Employees at balance sheet date 6) 21,327 21,237

1) Including large order contracts from South Africa totaling approximately
EUR 340 million in 2007
2) In EUR
3) Including discontinued operations
4) Net position = cash and cash equivalents + securities - bank debt
5) Full-time equivalents (FTE's), excl. apprentices/trainees and inactive
Employees

GEA Group Aktiengesellschaft is one of the largest pure mechanical
engineering groups in Germany. As an internationally operating technology
group, it concentrates on specialty mechanical engineering with a focus on
process technology and components. Group revenue amounted to EUR 5.2
billion in fiscal year 2008. The Group generated about 50 percent of this
revenue from the high-growth food manufacturing and beverages industries.
The company employed a workforce of over 21,000 staff members in 50
countries as of December 31, 2008. GEA Group is a market and technology
leader in 90 percent of its business areas. GEA Group is listed in the MDAX
index (G1A, WKN 660200).
12.03.2009 Financial News transmitted by DGAP

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Language: English
Issuer: GEA Group Aktiengesellschaft
Dorstener Straße 484
44809 Bochum
Deutschland
Phone: +49 (0)234 980-0
Fax: +49 (0)234 980-1004
E-mail: investor.relations@geagroup.com
Internet: www.geagroup.com
ISIN: DE0006602006
WKN: 660200
Indices: MDAX
Listed: Regulierter Markt in Berlin, Frankfurt (Prime Standard),
Düsseldorf, Hamburg, München; Freiverkehr in Hannover,
Stuttgart

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