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GEA cuts 2015 revenue target on weak milk markets

FRANKFURT - German food-processing technology maker GEA cut its 2015 organic revenue target on weak dairy markets, where prices have plummeted on slowing demand in China and emerging markets.

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FRANKFURT - German food-processing technology maker GEA cut its 2015 organic revenue target on weak dairy markets, where prices have plummeted on slowing demand in China and emerging markets.

GEA said it now expected a moderate decline in organic revenue, compared with a previous forecast of growth of around 5 percent. It stuck to its full-year forecast for core profit, which should be supported by an ongoing efficiency programme.

"In particular, the weakness of the milk markets and the postponement of several larger orders had a significant impact on our figures; this explains why we reduced our revenue forecast," Chief Executive Juerg Oleas said in a statement.

Dairy prices slumped to their lowest in over 12 years in early August. In the medium term, they are expected to recover as the El Nino weather pattern bites into production.

GEA's orders fell 13 percent in the third quarter, adjusted for exchange-rate changes, to 1.07 billion euros ($1.18 billion), well below the average estimate of 1.13 billion euros in a Reuters poll.

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The company said some large orders had been postponed and, although it had secured "various major orders" towards the end of the third quarter, these would no longer affect the current fiscal year.

Operating earnings before interest, taxes, depreciation, and amortisation (EBITDA) - excluding one-offs - fell 4 percent to 144 million euros from 149 million in the year-earlier period, a tad below consensus.

GEA shares were indicated down 1.4 percent ahead of the 0800 GMT Frankfurt market open.

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