GEA Gains Further Momentum in Second Quarter
EBITDA before restructuring expenses consequently increased by 9.4 percent to EUR 153.7 million (previous year: EUR 140.4 million), bringing the corresponding margin to 13.3 percent (previous year: 12.1 percent). In light of this very good performance in the first half of 2021, GEA raised its outlook for fiscal year 2021 for all parameters at the end of July.
“The climbing order intake in the second quarter confirms the trend from the preceding quarters: our business is gaining momentum across all of the company’s divisions and regions,” said Stefan Klebert, CEO of GEA Group AG. “We are optimistic for the future and will present our growth strategy for the next five years at our Capital Markets Day in late September.”
Strong order intake driven by all divisions
In the second quarter, order intake rose by 25.1 percent to EUR 1,294 million. The prior-year quarter had been impacted by Covid-19, with an order intake of EUR 1,034 million. On an organic basis, the improvement was 30.2 percent. Growth was driven both by all divisions and by all regions. Order intake in the first six months of this fiscal year was 6.9 percent above the comparable prior-year figure, this latter figure having been heavily impacted by the pandemic notably in the second quarter of 2020. At 11.5 percent, the improvement in order intake in the first half of the year was also significant on an organic basis.
GEA’s revenue, at EUR 1,156 million in the second quarter of 2021, was down 0.8 percent on the prior-year figure (EUR 1,165 million) due to exchange rate effects and divestments. In organic terms, however, revenue grew 3.4 percent. The share of service revenue increased by a further 1.1 percentage points in the quarter under review and now accounts for 33.8 percent of total revenue (previous year: 32.7 percent). Revenue in the first half of 2021, at EUR 2,221 million, was similarly 1.7 percent below the comparable figure for the prior year (EUR 2,258 million). On an organic basis, however, revenue was up, with growth of 2.8 percent.
Further increases in profitability, financial position and ROCE
EBITDA before restructuring expenses rose by 9.4 percent to EUR 153.7 million. Alongside the improved gross margin, the efficiency measures already introduced last year also contributed here. All divisions increased the EBITDA margin before restructuring expenses compared to the prior-year quarter, in some instances by several percentage points. At EUR 274.8 million, EBITDA before restructuring expenses for the first half of 2021 was likewise a substantial 12.0 percent higher than in the same period a year earlier (EUR 245.4 million). The margin went up 1.5 percentage points to 12.4 percent (previous year: 10.9 percent). This improvement in the margin was notably due to higher margins in the new machinery business and to the service business accounting for a larger share of the total.
Profit for the period rose by 70.0 percent to EUR 76.9 million (previous year: EUR 45.2 million). Earnings per share increased as a result from EUR 0.25 to EUR 0.43 in the second quarter. The EUR 133.6 million profit for the period in the first half year was 78.0 percent higher than in the same period of the prior year (EUR 75.1 million). This made for a significant increase in earnings per share from EUR 0.42 to EUR 0.75. Earnings per share before restructuring expenses likewise rose, from EUR 0.54 to EUR 0.87.
Net liquidity – for the first-time including lease liabilities – came to EUR 202.8 million at the reporting date, a significant improvement on the EUR 73.9 million net debt in the prior year. This increase was mainly due to the improvement in earnings and a sharp reduction in working capital. At EUR 153.9 million in the first half year, cash flow from operating activities of continuing operations was EUR 66.8 million down on the prior-year period. Cash flow from investing activities improved by EUR 10.3 million to EUR -19.3 million. Free cash flow consequently came to EUR 134.5 million in the first half of the year, compared with EUR 191.0 million in the same period of the prior year.
Group-level return on capital employed (ROCE) improved significantly to 21.4 percent (previous year: 14.8 percent). This reflected an increase in EBIT before restructuring expenses and a simultaneous decrease in capital employed. ROCE also increased in all divisions, in some cases substantially
Share buyback program with a volume of up to EUR 300 million announced
The Executive Board of GEA Group Aktiengesellschaft resolved on August 12 that the company will acquire treasury shares worth up to EUR 300 million (excluding incidental costs) via the stock exchange using the authorization granted by the Annual General Meeting on April 19, 2018. The program is scheduled to start in August 2021 and to be completed by the end of 2022. Up to EUR 150 million of the mentioned total value is to be used within the first six months. The Executive Board sees the acquired shares in particular as an acquisition currency or stock dividend.
On July 29, after presenting its preliminary key financials for the first half of the year, GEA significantly raised its outlook for this fiscal year. Buoyed by increasing gains from the ongoing efficiency program, the Group now expects organic revenue growth of 5 to 7 percent, compared with 0 to 5 percent previously. EBITDA before restructuring expenses at constant exchange rates is now expected to be in a range between EUR 600 million and 630 million. Previously, until late July, this figure was anticipated to be between EUR 530 million and EUR 580 million. For ROCE at constant exchange rates, the updated forecast is 23 to 26 percent instead of the previous 16 to 20 percent. In this new forecast, GEA assumes that there will no longer be any severe restrictions on economic activity in the second half of 2021 due to measures to combat the Covid-19 pandemic.
Source: GEA Group Aktiengesellschaft