DGAP-News: GEA Group Aktiengesellschaft: GEA has adjusted its outlook for 2018 cash flow driver margin and anticipates subdued development for 2019

GEA has adjusted its outlook for 2018 cash flow driver margin and anticipates subdued development for 2019

Düsseldorf, November 23, 2018 - Contrary to internal expectations, GEA Group Aktiengesellschaft's working capital continued to rise in October as a result of ongoing positive sales growth and a high order backlog. Against this backdrop, the Executive Board has decided to adjust the outlook for the 2018 financial year with regard to the operating cash flow driver margin to a corridor between 6.5 and 7.0 percent (previously: approx. 8.5 percent) on the basis of constant exchange rates compared with the previous year. This expectation corresponds to a reported operating cash flow driver margin - i.e. based on current exchange rates - of between 7.0 and 7.5 percent. Regarding revenue growth and operating EBITDA margin in 2018 GEA reaffirms its expectations from October 10.

The step-up in working capital compared with September was caused by an invoice-related increase in trade receivables, a persistently high level of inventories given high factory utilization and lower advance payments from customers. At the same time, receivables overdue by more than 90 days could be further brought down in October, which resulted in a reduction of around 20 percent since the beginning of the year.

GEA expects reported working capital to average around 17 percent of revenues for the year 2018, up from around 16 percent in 2017. Reported working capital at the end of the year is expected to amount to some EUR 900 million. Furthermore, a net position of around minus EUR 300 million is foreseen for this reporting date.

As expected, from an organic perspective, GEA's order intake continued to grow moderately during October, however, the Group sees increasing signs that the economic environment is likely to become more difficult in 2019. Currently, GEA therefore anticipates that it will become harder in a challenging market environment to compensate for cost Inflation by further price increases in fiscal year 2019. Without taking into account expected increases in the cost of materials, the company is already anticipating incremental charges of around EUR 70 million compared with 2018. This number already includes anticipated increases in personnel costs of around EUR 40 million, as known from previous years, as well as a non-recurring other operating income of around EUR 9 million, which had been mentioned in the half-yearly financial report. GEA's budget process is currently ongoing and will take into account appropriate countermeasures.

Corporate Media and Press:
Marc Pönitz
Peter-Müller-Str. 12, 40468 Düsseldorf, Germany
Phone +49 211 9136-1500
marc.poenitz@gea.com
 

About GEA
GEA is one of the largest suppliers for the food processing industry and a wide range of other industries that generated consolidated revenues of approximately EUR 4.6 billion in 2017. The international technology group focuses on process technology, components and sustainable energy solutions for sophisticated production processes in various end-user markets. The group generates around 70 percent of its revenue in the food and beverages sector that enjoys long-term sustainable growth. As of December 31, 2017, the company employed about 18,000 people worldwide. GEA is a market and technology leader in its business areas. The company is listed on the German MDAX (G1A, WKN 660 200). In addition, GEA's stock is included in the MSCI Global Sustainability Indexes. Further information is available on the Internet at gea.com.