Cigna earnings beat by $0.04, revenue topped estimates
Investing.com -- GEA Group Aktiengesellschaft reported strong fourth-quarter results on Tuesday, with robust order intake but profitability challenges due to one-off costs and a higher-than-expected tax rate, sending the stock down nearly 1%
GEA exceeded expectations in order intake, reaching €1,598 million—up 29% organically and 17% above consensus.
The quarter saw the return of large orders, with seven contracts totaling €230 million, compared to just two worth €41 million in the prior year.
Growth was broad-based across divisions and customer industries, particularly in Dairy Processing and Food.
While the backlog for 2025 conversion is down €200 million year-over-year, these large orders are expected to drive sales in 2026.
Revenue was strong at €1,508 million, a 9% organic increase and a 3% beat against expectations.
Service sales grew 19% year-over-year, increasing their share of total revenue to 39.2%. Organic new machine sales also contributed, rising 2.7% year-over-year.
EBITDA before restructuring reached €239 million, 1.7% ahead of consensus, with a margin of 15.9%—a slight improvement from 14.5% in Q4 2023 but 20 basis points below expectations.
The margin benefited from gross margin expansion but was impacted by higher operating costs. EBIT came in at €142 million, a 20% miss due to restructuring charges, including a €1,500 bonus for employees, resulting in €68 million in one-off costs.
The effective tax rate was 36%, above the 24% consensus estimate, contributing to the EPS shortfall.
Free cash flow was a bright spot, reaching €353 million in Q4, up from €235 million in Q4 2023. Working capital improved, with net working capital (NWC) at €327 million, outperforming guidance at 6.0% of sales.
GEA proposed a dividend of €1.15 per share, up from €1 in 2023, though slightly below RBC’s estimate of €1.20.
For FY2025, GEA forecasts organic revenue growth of 1%–4%, an EBITDA margin before restructuring of 15.6%–16.0%, and a return on capital employed of 30%–35%.
The EBITDA margin forecast is slightly below consensus, and analysts expect a mix dilution effect due to the high LPT order intake.
On a macro level, GEA benefits from strong momentum in food and dairy markets. The Global Dairy Trade index stands at 1,251 points, up 15% year-over-year and 25% above the long-term average. European raw milk prices remain elevated at €0.54/kg, near record highs.
Meanwhile, input costs for dairy farmers are stable or declining, with soy prices down 14% year-over-year and EU feed concentrate costs down 8% year-over-year.