GEA Group AG: Q2 preview and model update – bullish commentary largely reflected in consensus

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GEA Group AG: Q2 preview and model update – bullish commentary largely reflected in consensus

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ram.mehta@jpmchase.com

translating into revenues of €1,358m. We forecast Q2 EBITDA (before J.P. Morgan India Private Limited

restructuring) of €229m, or a 16.9% margin vs. €217m, or 16.5% margin, a year

ago. Table 1 summarises our Q2 expectations by segment and for the Group. Specialist Sales contact details:

• Guidance: GEA guides for FY organic sales growth of 5-7% (JPMe +6.2%, Sam Edmunds - Specialist Sales - European Industrials

consensus 6.0%) and an EBITDA before restructuring margin of 16.6-17.2%

(44-20) 7742-8733

(JPMe 16.9%, consensus 17.0%). The mid-point of the guidance would imply sam.edmunds@jpmorgan.com

a 40bps y/y margin improvement, which is in line with what GEA reported in

Key Changes (FYE Dec) Q1 and what we forecast for Q2. In each of the past three years, GEA has either

Prev Cur Δ

upgraded guidance with H1 results or before. We expect the company to Adj. EPS - 26E (€) 2.99 3.02 0.9%

reiterate FY guidance with the H1 results. Following significant margin Adj. EPS - 27E (€) 3.36 3.41 1.6%

expansion over the past six years, the base has now moved above historical

averages, which, in our view, will limit the pace of future margin expansion. Style Exposure

• Take-aways from the JPM European Industrial conference: We hosted

GEA CFO Alexander Kocherscheidt and Head of IR Oliver Luckenback at our

European Industrial conference last month. GEA highlighted its resilient

business model and reiterated comments on demand and cash flow made at the

Q1 results. The company sees an active project pipeline across most businesses

and order sizes, and is confident of a solid full year order intake. The Middle