GEA Trims Profit Outlook, Posts Rise in Dairy Orders
German food-processing equipment maker GEA expects full-year operating profit to come in at the bottom of its targeted range but reported a double-digit rise in orders for its struggling dairy processing business on Friday.
GEA had already cut its profit guidance in July and the market shrugged off the latest guidance. Its shares, which have been buoyed by stake purchases by activist investors Elliott and GBL, jumped nearly 3 percent to a 16-month high of 42.65 euros by 0905 GMT.
“A guide toward the low end of the FY17 range shouldn’t come as a big surprise,” wrote Barclays analyst Lars Brorson, keeping his “equal weight” rating.
GEA now targets earnings before interest, tax, depreciation and amortisation (EBITDA) at the low end of a range of 600 million to 640 million euros ($699 million to $745 million), excluding charges for a problem-struck bottling line.
Third-quarter EBITDA rose 7 percent to 120 million euros, below all the estimates in a Reuters poll.
GEA reported a double-digit year-on-year increase in order intake for dairy processing, helping to counter a drop in pharmaceutical and chemical orders.
Overall orders were down 2 percent at 1.11 billion euros.
Danone, the world’s largest yoghurt maker, said last month that its dairy business had improved in North America but sales remained negative in a challenging market, and dairy sales in Brazil fell by a double-digit rate.
GEA’s machines are used to make milk products, instant coffee and chicken nuggets. ($1 = 0.8586 euros)
