GEA Optimizes Group Structure

Expected annual savings until the end of 2017: at least EUR 100 million

22-Aug-2014 - Germany

Within the scope of its “Fit for 2020” initiative, the Executive Board of GEA Group Aktiengesellschaft resolved to introduce a new group structure. As part of the strategic realignment of the company, this initiative provides an optimized organizational setup with reduced structural complexity. Hence, it will allow for significant cost reduction and fosters further growth. Following the recent divestiture of the heat exchanger business, GEA is sharpening its focus on the customer industries food and beverages from which the group meanwhile receives about 75 percent of its order intake.

In the course of 2015, GEA will bundle the development and manufacturing of products and the provision of
process solutions into the two new Business Areas, “Equipment” and “Solutions” and report accordingly. The
current Segments will be integrated into these two Business Areas. This new bundling into Business Areas of
about equal strength focusing on their respective successful business models promises to exploit more
operational synergies across technologies and applications and will promote functional excellence through the
standardization of processes.

All customer-oriented Sales and Service activities are to be combined on a local level into one organization
per country. With the merging of the currently still large number of sales and service companies, local
competencies will be strengthened, existing synergy potentials realized even more efficiently and the visibility
of the common brand GEA will be highlighted in the market. Anchoring the independent regional perspective
in the management of sales and services is also geared to accelerate the systematic opening of new growth
opportunities in emerging markets.

In addition, administrative functions will be streamlined, stronger standardized and managed considerably
more centrally in the future, which besides cost savings, is designed to ensure uniform high process
standards globally. The Global Corporate Center will centrally manage all steering and support functions
which so far have mostly been organized decentrally within the operating units. Regional Shared Service
Centers will take care of the implementation of standardized administrative processes such as accounts
receivables and payables or payroll accounting and thus relieve the operating units.

With project “Fit for 2020”, the target is to achieve annual cost savings of at least EUR 100 million by the end
of 2017. According to first estimates the cash-relevant non-recurring expenditures until then are likely to add
up to approximately the amount of the aforementioned annual savings. Based on today’s business volume,
the implementation measures will include world-wide personnel capacity reductions of approx. 1000 full-time
equivalents over the next 2-3 years. However, the exact number of adjustments, the timeline and affected
locations are subject to further analyses during the “Blueprint Detailing” phase. Personnel-related measures
will be discussed in a timely and adequate manner with the relevant employee representatives.

“The goal of the strategic realignment of GEA is to ensure the sustainable development of value added in the
company group. With this new group structure we will not only leverage existing savings potentials but also
establish the organizational platform for reaching our ambitious growth targets. The future GEA will have
substantially flatter hierarchies, act more closely to the local customer and boast a distinctly clearer footprint
as a globally uniform brand. Further details of the new organization will now be determined in a blueprint
detailing phase until the end of the year”, affirmed Jürg Oleas, CEO of GEA Group Aktiengesellschaft.

https://www.chemeurope.com/en/news/149533/gea-optimizes-group-structure.html