Technology group GEA posted an increase in both order intake and revenue in the third quarter of 2019. Order intake rose to EUR 1.25 billion in the last quarter, an increase of around 5 percent compared to the same quarter in 2018.
Both basic business and six large projects (three of which were awarded in dairy processing) contributed to this positive development. At EUR 1.23 billion (4 percent above the previous year s figure), revenue fared equally well, with growth recorded primarily in the Separation, Homogenizers, Flow Components and Compression product groups, as well as in Dairy and Utilities. With an increase of around 8 percent to some EUR 400 million, GEA chalked up healthy year-on-year revenue growth in its high-margin service business, too. These developments gave rise to a book-to-bill ratio (i.e. order intake relative to revenue) of 1.02 for the third quarter of the year. Reflecting the rise in order intake and the positive revenue trend, GEA decided to increase its previous revenue forecast slightly; the company now expects revenue for 2019 as a whole to be on par with previous year (2018: EUR 4.83 billion). A revenue figure slightly below the 2018 level had been postulated in the earlier outlook.
At EUR 143 million, EBITDA before restructuring measures was around 1.4 percent below the previous year s value. With regard to the Business Area Equipment, third-quarter earnings were impacted by disproportionate growth in low-margin product groups, declining margins in new machinery business, and special effects relating to the settlement of a legal dispute. In the Business Area Solutions, conversely, an initiative to optimize project management in dairy processing increased earnings. GEA s accumulated figure for EBITDA before restructuring measures for the first three quarters of the year was around EUR 329 million (previous year: EUR 364 million). All told, special effects impacted earnings in the amount of around EUR 3 million in the quarter under review, and by EUR 47 million over the nine-month period.
Owing to a considerably positive free cash flow, GEA succeeded in improving its net financial position as of September 30, 2019 (EUR -263 million), by almost EUR 70 million compared with the same period of the previous year. ROCE (Return on Capital Employed) for the period ending September 30, 2019, amounted to 10.5 percent (average of the last 4 quarters).
"We re delighted to have countered the trend in the engineering sector by posting an increase in order intake in the third quarter. This, coupled with the positive revenue figure for the first nine months of the year, allowed us to increase our general revenue forecast for 2019 slightly. We re pleased to confirm our outlook for the other key ratios, too - EBITDA before restructuring measures and ROCE," said Stefan Klebert, CEO of GEA Group Aktiengesellschaft. "We can already tell that the efficiency measures in the Business Area Solutions are starting to bear fruit. And as reported, initial measures to streamline our portfolio have been initiated. The next milestones are the official launch of the new organizational structure on January 1, 2020, and the arrival in mid-January of Johannes Giloth as board member for our newly mandated Procurement, Production and Logistics organization."