GEA Group: Restoring Confidence in Capital Markets

Field report by IR.on Executive Board member Fabian Kirchmann on IR Interim Management at GEA Group from March 2019 to February 2020

Cologne, July 2020 Trust is the lubricant for a company’s sustainable success on the stock exchange. When I took over as interim Head of Investor Relations at the MDAX-listed GEA Group in March 2019, the company’s share price was at a seven-year low after several profit warnings in a row. The capital market had lost confidence in the company’s management. As a result, the Supervisory Board had brought on board a new CEO, Stefan Klebert, and a new CFO, Marcus A. Ketter, who joined the company in late May 2019. A major challenge for the new management, which was even increased by the fact that also active investors were among the shareholders.

The main objective from the management’s point of view and in the focus of my role as interim investor relations manager in the first months was to identify the causes of the downward trend in shareprice, and to initiate and communicate the restructuring and transition program to the financial markets. To this end, the new CEO presented his review of the situation as well as a set of short-term restructuring measures and strategic fields of action at the analysts’ conference held to announce the FY 2019 figures. This also included the return to a divisional organizational structure and more entrepreneurial responsibility for the Group’s executives.

At a Capital Markets Day in London in September 2019, the fields of action were put in more concrete terms and underpinned with measurable figures and a mid-term guidance. The aim of this most important IR event of the year was to communicate the progress made in the course of the Group’s restructuring and reorganization process in such a way that realistic expectations regarding the speed of implementation and the effect on business performance were raised.

The steps announced represented a major change process for investor relations: a new management, new KPIs, a new organizational structure and analysts and investors whose expectations were marked by an obvious lack of trust. As one of the first measures taken during my term as interim manager, I introduced a new consensus management system with the help of a specialist service provider. This also included the detailed explanation of newly introduced KPIs for guidance and was welcomed by analysts and investors alike. The IR department’s long-standing relationships with a large number of sell-side analysts facilitated the introduction. Overall, the existing IR team provided essential support for the implementation of the measures. An interim manager often lacks important insights into a company’s history and established relations to key stakeholders. On the other hand, for an “external” manager it is easier to push ahead changes without the typical company-specific blinders.

In the end, GEA management was able to successively improve analysts and investors’ trust in the Group . This is reflected in the performance of the GEA shares, which gained more than 30 % in FY 2019, as well as the increasingly positive analysts’ reports and the gradual raising of the target prices for the GEA share.

“Trust is a series of promises kept.” The new GEA management is now facing the task of consolidating the good start into a constant series. In the first quarter of 2020, GEA were able to show the market positive news again, sending the share price rising well above the pre-coronavirus level. On that note, keep up the good work...

Performance of the GEA share in 2019