GEA Shares Tumble as 2014 Forecast Falls Short of Expectations

GEA Group AG, a German maker of food-processing equipment, fell the most in a year after predicting 2014 profit that disappointed analysts. The shares dropped as much as 6.8 percent.

The company forecast full-year earnings before interest, taxes, depreciation and amortization from continuing operations of 550 million euros ($743 million) to 590 million euros.

“We feel more comfortable setting targets we are certain we can achieve,” Chief Financial Officer Helmut Schmale said in a press conference at the company’s Dusseldorf headquarters. “Exchange-rate uncertainty in emerging markets may continue.”

GEA announced plans in June to sell its heating-exchangers unit as it seeks to focus on its main business. The company, which was founded in 1881 as a metals trader and today makes milking machines, beer-brewing kits and lollipop production lines, saw orders decline in Europe and the Americas last year, while increasing elsewhere.

“We believe that the management wants to be conservative,” Frankfurt-based DZ Bank analyst Markus Turnwald said in a note to clients. “This Ebitda guidance is well below estimates.”

Ebitda climbed 6.1 percent to 241 million euros in the fourth quarter, the company said today in a statement, less than the 248 million-euro average estimate of analysts in a Bloomberg survey. Full-year Ebitda increased 11 percent to 660.1 million euros, including the heating-exchangers business.

The shares fell as much as 7.2 percent, the steepest intraday decline in a year, and were trading 2.8 percent lower at 33.22 euros as of 1 p.m. in Frankfurt. That extended the decline this year to 4.3 percent, valuing the company at 6.4 billion euros.

Order intake at the mechanical equipment division, which Turnwald said is one of the most profitable, declined 5.9 percent, while slipping 6.1 percent at the food solutions unit and 2.8 percent at the refrigeration division.

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