GEA Exceeds Upgraded Targets for 2022 and Proposes Higher Dividend
(Image source: GEA Group Aktiengesellschaft)
ROCE stood at 31.8 percent, net working capital as a percentage of revenue at 6.1 percent and net liquidity at EUR 346.4 million.
“Dealing with multiple, interrelated crises in the past year was a major challenge. This makes our success all the more remarkable,” said CEO Stefan Klebert. “We even slightly exceeded the upgraded guidance issued after the strong third quarter. This would not have been possible without our dedicated employees. I would like to thank the GEA team around the world for their exceptional performance.”
All divisions contribute to order intake, in some cases with double-digit growth rates
Order intake increased significantly by 8.7 percent in 2022 to EUR 5,678.9 million (2021: EUR 5,222.5 million). Organic growth stood at 7.6 percent. All divisions contributed to this, in some cases with double-digit growth. Among the customer industries, dairy farming, dairy processing and chemicals showed substantial double-digit growth rates.
In the course of the reporting year, GEA completed 17 large orders (volume over EUR 15 million) worth a total of EUR 419 million. The regional focus was on the Americas and Asia Pacific. In the prior year, there were nine large orders worth a total of EUR 293 million. At EUR 3,192.7 million, the order backlog was 14.6 percent higher than in the prior year (2021: EUR 2,785.4 million).
Revenue rose by 9.8 percent to EUR 5,164.7 million (2021: EUR 4,702.9 million). The organic revenue growth of 8.9 percent exceeded the increased guidance of more than 7 percent. All divisions grew organically, some even at double-digit rates. In terms of customer industries, dairy farming and chemicals contributed significant double-digit revenue growth, while pharma and food also delivered positive growth rates. The share of service revenue rose further from 34.2 percent in the prior year to 34.9 percent in 2022.
EBITDA before restructuring expenses and ROCE exceed upper end of guidance range
EBITDA before restructuring expenses rose by 14 percent to EUR 712 million (2021: EUR 624.8 million) and, at EUR 691 million on a constant exchange rate basis, exceeded the upper end of the guidance range of EUR 630 million to EUR 690 million. All divisions contributed to this positive performance, with the exception of Heating & Refrigeration Technologies due to divestments. The corresponding EBITDA margin increased by 0.5 percentage points to 13.8 percent (2021: 13.3 percent), which is the highest level since 2016.
Profit for the period climbed 31.5 percent to EUR 401.4 million (2021: EUR 305.2 million). The improved profit for the period and a lower average number of shares compared to the prior year made for a significant increase in earnings per share, from EUR 1.70 to EUR 2.28. Earnings per share before restructuring expenses also improved markedly, from EUR 1.99 to EUR 2.58.
Under the share buyback program launched on August 16, 2021 and completed on December 30, 2022 (maximum amount EUR 300 million), 8,161,096 outstanding shares were repurchased and are now held as treasury shares. The amount of EUR 205.6 million was spent on the share buyback in the fiscal year.
Net liquidity amounted to EUR 346.4 million as of the December 31, 2022 reporting date (2021: EUR 499.8 million). The largest cash outflows were attributable to share repurchases and the dividend payout, among other factors. Net working capital as a percentage of revenue, at 6.1 percent (2021: 5.1 percent), remained below the target range of 8 to 10 percent. The slight increase compared to the prior year is due to higher inventories as a result of the supply chain challenges.
Capital employed (average of the last four quarters) grew from EUR 1,593.6 million to EUR 1,665.9 million as of the reporting date due to higher non-current assets and the slight increase in net working capital. ROCE improved in fiscal year 2022 from 27.8 percent to 31.8 percent. All divisions increased ROCE compared to the prior year, in some cases significantly. ROCE at constant exchange rates, at 30.9 percent, also exceeded the upper end of the 24 to 30 percent guidance range.
Further dividend increase proposed
GEA wants its shareholders to benefit from its strong and sustainable business model through an attractive dividend. In line with this and the very good earnings growth in fiscal year 2022, a dividend of EUR 0.95 per share will be proposed to the Annual General Meeting – 5 cents more than in the previous year.
GEA expects further revenue and margin growth in 2023
Further organic revenue growth of more than 5 percent is expected for fiscal year 2023. EBITDA before restructuring expenses at constant exchange rates is anticipated to be in a range between EUR 730 million and EUR 790 million. At the same time, the EBITDA margin before restructuring expenses is forecast to increase further to above 13.8 percent. GEA expects ROCE to be at least 29 percent at constant exchange rates.
Mission 26: Medium-term targets for 2026 confirmed
GEA has confirmed the medium-term targets set out in the Mission 26 growth strategy presented in September 2021. These see organic group revenue growing by an average of 4 to 6 percent annually up to 2026. By the end of 2026, the EBITDA margin before restructuring expenses is targeted to increase beyond 15 percent (2022: 13.8 percent) and ROCE to more than 30 percent (2022: 31.8 percent).
GEA achieves highest MSCI ESG Rating
In January 2023, GEA was upgraded from “AA” to “AAA” in the MSCI ESG Rating. This places the company in the top 11 percent in Industrial Machinery. GEA also holds top positions in its segment in all other major ESG ratings. Additionally, GEA was the only German company to be included in the Dow Jones Sustainability Europe Index in 2022.
GEA launches new “Add Better” green label
GEA develops sustainable solutions for lines, machinery and components so that they use less raw material, energy and water and produce less waste. A new green label, “Add Better,” to be launched in 2023 will enable customers to clearly see the benefits of sustainable product solutions. The Add Better label is based on a process developed in 2022 that calculates the efficiency improvements according to ISO standards.
“At the heart of everything we do every day is our purpose, ‘Engineering for a better world.’ Sustainability is an integral part of our ‘Mission 26’ strategy. To achieve our goals and move faster, we are focusing our development capabilities on new products that are even more energy- and resource-efficient than before,” added CEO Stefan Klebert. “With the Add Better label, we want to make this even more transparent for our customers.”
Source: GEA Group Aktiengesellschaft