GERMANY – GEA, a leading technology supplier for food processing company, has agreed to sell its barn equipment and milk cooling technology businesses to private equity firm Mutares SE & Co KGaA for an undisclosed sum.
The companies concerned; GEA Farm Technologies Japy, and Royal De Boer Stalinrichtingen, were part of the groups farm technologies division.
Japy is a a French manufacturer of milk cooling tanks while Royal De Boer Stalinrichtingen is a European supplier of barn equipment based in the Netherlands.
Together, the two companies reportedly generated revenues of approximately €50 million (about US$59 million) in 2019.
GEA says the divestiture is in line with its strategic portfolio optimisation, enabling the farm technologies division to focus on automation and digitalisation of milking installations and processes, as well as on products that ensure milk quality and improve cow health.
“We are pleased that Mutares SE & Co. KGaA will become the new owner of both companies, as Mutares is in a position to develop each company’s business potential to the best possible extent,” GEA Group CEO Stefan Klebert said.
Following the transaction, GEA will retain access to the product portfolio of both divested companies to continue serving individual customer needs.
GEA added that the division will continue to offer different kinds of manure handling products for the North American market.
The sale of the two companies follows a recent release of the company third-quarter results which were a testament of how COVID-19 has continued to weigh on GEA’s order intake and revenue.
The company recorded a 15.9% reduction in order intake compared to last year while revenue was down 7.2 percent compared to last year’s quarter.
GEA said that the third quarter has been negatively impacted in particular by customers’ reluctance to sign large orders resulting in low sales and reduced income.
Revenue for the first nine months amounted to US$4.04 billion, a decline of 3.8 percent compared to the 2019 figure (EUR 3,539 million).
Despite of the reduction in revenues and sales, GEA said that the positive effects of the measures introduced last year to improve efficiency are becoming increasingly noticeable in the third quarter of 2020.
For example, the Group further increased EBITDA before restructuring measures, improved free cash flow, continued to reduce net working capital and converted the net debt at the prior-year reporting date into net liquidity.
Looking into the future, Stefan Klebert says, “Given the current resurgence of COVID-19 cases globally, we must be cautious with our expectations for the fourth quarter,” explains Stefan Klebert, CEO of GEA Group AG.
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