GEA Delivers Profitable Growth in 2021
EBITDA before restructuring expenses improved by a substantial 17.3 percent to EUR 624.8 million, with the corresponding margin gaining 1.8 percentage points to 13.3 percent – the highest figure since 2016. Return on capital employed (ROCE) stood at 27.8 percent, net working capital as a percentage of revenue at 5.1 percent and net liquidity at EUR 499.8 million.
“GEA can look back on a highly successful year in 2021, in which GEA shares significantly outperformed the market,” said CEO Stefan Klebert. “Our goal is to ensure long-term value enhancement for our stakeholders. We achieve that goal through the strong operating performance of our divisions, which focus on sustainability alongside innovation & digitalization. Accordingly, these are two key factors in our Mission 26 strategic plan to continue our profitable growth trend.”
All divisions contribute to substantial growth in order intake
Order intake increased by a significant 11 percent in 2021 to EUR 5,222.5 million (2020: EUR 4,703.0 million). Organic growth stood at 14 percent. All divisions contributed to this with double-digit growth rates, with the exception of Heating & Refrigeration Technologies, which achieved high single-digit growth. Among customer industries, food, pharma and chemicals showed substantial double-digit growth rates.
The very strong order intake was also partly due to nine large orders (volumes exceeding EUR 15 million) for a total of EUR 293 million in the beverage, pharma and food industries, including one in the growth market of New Food with an order value well into the high double-digit million euro range. At EUR 2,785.4 million, the order backlog reached a new record high (2020: EUR 2,298.5 million).
Revenue increased up by 1.5 percent in 2021 to EUR 4,702.9 million (2020: EUR 4,635.1 million), and by 4.3 percent on an organic basis. Due to global supply shortages, organic revenue growth fell slightly short of the expected corridor of between 5 and 7 percent. Growth in the Separation & Flow Technologies and Farm Technologies divisions more than made up for lower growth in the remaining divisions. The share of service revenue rose from 33.6 percent in the prior year to 34.2 percent in 2021.
Significant improvements in profitability, financial position and ROCE
EBITDA before restructuring expenses increased in the reporting year by 17.3 percent to EUR 624.8 million (2020: EUR 532.5 million), at the upper end of the EUR 600 million to EUR 630 million guidance range. The corresponding EBITDA margin improved by 1.8 percentage points to 13.3 percent (2020: 11.5 percent), which is the highest level since 2016. All divisions contributed to this improvement.
Profit for the period increased in fiscal year 2021 to EUR 305.2 million, compared to EUR 96.8 million in the prior year. This and a smaller average number of shares than in 2020 made for a significant increase in earnings per share from EUR 0.54 to EUR 1.70. Earnings per share before restructuring expenses likewise showed a substantial improvement, from EUR 1.03 to EUR 1.99. The share buyback program launched in August 2021 (for a total of up to EUR 300 million) saw shares repurchased in the amount of some EUR 94 million by year-end.
Net liquidity more than doubled to EUR 499.8 million as of December 31, 2021 (2020: EUR 245.3 million). This gain in liquidity was mainly due to the strong improvement in earnings and a sharp reduction in net working capital. Net working capital as a percentage of revenue improved markedly to 5.1 percent (2020: 7.9 percent).
As a result of the lower net working capital, capital employed (average of the last four quarters) went down from EUR 1,943 million to EUR 1,594 million as of December 31, 2021. Return on capital employed (ROCE) consequently climbed to 27.8 percent (2020: 17.1 percent), exceeding the expected range of between 23.0 and 26.0 percent. In the reporting year, all divisions increased ROCE compared to the prior year, in some cases substantially.
Higher dividend proposed
GEA intends shareholders to benefit from the company’s strong and sustainable business model. On the basis of an attractive dividend policy and the very good earnings growth in fiscal year 2021, a dividend of EUR 0.90 per share – 5 cents more than the previous year – will be proposed to the Annual General Meeting.
Revenue and earnings growth expected for 2022
In light of the very high order backlog, organic revenue growth of more than 5 percent is expected for fiscal year 2022. EBITDA before restructuring expenses at constant exchange rates is expected to be in a range between EUR 630 million and EUR 690 million. For ROCE, the company anticipates a figure between 24 and 30 percent (at constant exchange rates).
Medium-term financial targets confirmed
At the end of September 2021, GEA presented the medium-term targets it aims to achieve by the end of fiscal year 2026 within the scope of Mission 26. These see organic group revenue growing up to that time by an average of 4.0 to 6.0 percent annually, resulting in revenue of around EUR 6 billion. The EBITDA margin before restructuring expenses is expected to increase to over 15 percent alongside a significant improvement in ROCE to more than 30 percent.
Source: GEA Group Aktiengesellschaft
