GEA Earnings: Strong Profit Margin Progression Drives 2024 Outlook Upgrade Despite Still Weak Orders

We make no change to our EUR 45 fair value estimate with wide-moat GEA Group’s second-quarter 2024 offering resilient top-line growth and pleasing profit margin expansion amid otherwise tepid demand conditions. Order intake remained soft, declining 3.5% year on year on an organic basis amid still weak industrial output, particularly in Europe. Second-quarter order intake for the separation and flow and heating and refrigeration segments were bright spots amid the otherwise weak demand environment as new orders from food, pharmaceutical, and distribution and storage customer industries rebounded. While second-quarter orders tracked broadly in line with our full-year expectations, we’ve lowered our full-year order intake forecast by 3% to EUR 5.2 billion to account for currency headwinds, which we expect will offer a greater drag on order intake than we’d previously credited. GEA shares screen as undervalued, trading at a 12% discount to our unchanged valuation.