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GEA Group Updates 2018 Outlook

GEA Group AG (GEAGF.PK,GEAGY.PK) said it adjusted the outlook for the 2018 financial year with regard to the operating cash flow driver margin to a corridor between 6.5 and 7.0 percent on the basis of constant exchange rates compared with the previous year. Previously, it expected operating cash flow driver margin of about 8.5 percent.'

The expectation corresponds to a reported operating cash flow driver margin -i.e. based on current exchange rates - of between 7.0 and 7.5 percent. Regarding revenue growth and operating EBITDA margin in 2018 GEA reaffirms its expectations from October 10.

GEA expects reported working capital to average around 17 percent of revenues for the year 2018, up from around 16 percent in 2017. Reported working capital at the end of the year is expected to amount to some 900 million euros. Furthermore, a net position of around minus 300 million euros is foreseen for this reporting date.

GEA's order intake continued to grow moderately during October, however, the Group sees increasing signs that the economic environment is likely to become more difficult in 2019.

Currently, GEA anticipates that it will become harder in a challenging market environment to compensate for cost inflation by further price increases in fiscal year 2019. Without taking into account expected increases in the cost of materials, the company is already anticipating incremental charges of around 70 million euros compared with 2018. This number already includes anticipated increases in personnel costs of around 40 million euros, as known from previous years, as well as a non-recurring other operating income of around 9 million euros, which had been mentioned in the half-yearly financial report. GEA's budget process is currently ongoing and will take into account appropriate countermeasures.

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