2016-02-03 19:42:40 CET

2016-02-03 19:42:40 CET


REGULATED INFORMATION

Islandic English
Marel hf. - Financial Statement Release

Marel: 2015- Year of profitable growth and strategic moves 


Marel Q4 and full year 2015 Results
(All amounts in EUR)


Q4 2015 - Solid performance and MPS acquisition


  -- Revenue for Q4 2015 totaled 201.9m [Q4 2014: 200.0m].
  --  Adjusted* EBITDA for Q4 2015 was 30.0m or 14.9% of revenue [Q4 2014:
     28.1m]. EBITDA was 23.6m or 11.7% of revenue [Q4 2014: 21.0m].
  -- Adjusted EBIT for Q4 2015 was 22.2m or 11.0% of revenue [Q4 2014: 16.1m].
     EBIT was 14.6m or 7.2% of revenue [Q4 2014: 8.5m].
  -- Net result for Q4 2015 was 9.9m [Q4 2014: 3.0m]. Earnings per share were
     1.40 euro cents in Q4 2015 compared with 0.41 euro cents in Q4 2014.
  -- Cash flow from operating activities before interest and tax in Q4 2015 was
     26.9m [Q4 2014: 32.7m].
  --  The order book was at 180.9m at the end of the quarter compared with
     187.7m at the end of Q3 2015 [Q4 2014: 174.9m].

Full year 2015 - Adjusted EBIT 100 million, 12.2% of sales

  --  Revenue for 2015 totaled 818.6m, an increase of 14.9% compared with
     previous year [2014: 712.6m].
  -- Adjusted EBITDA was 135.7m or 16.6% of revenue compared with 83.7m and
     11.7% for 2014. EBITDA was 120.8m or 14.8% of revenue [2014: 66.7m and
     9.4%].
  -- Adjusted EBIT was 99.9m or 12.2% of revenue compared with 48.8m and 6.8%
     for 2014. EBIT was 81.6m or 10.0% of revenue [2014: 29.2m and 4.1%].
  -- Net result for 2015 was 56.7m [2014: 11.7m]. Earnings per share were 7.93
     euro cents compared with 1.60 euro cents in 2014.
  -- Cash flow from operating activities before interest and tax was 119.7m
     [2014: 102.2m]. Net interest bearing debt at the end of the year 2015 was
     142.8m compared with 174.3m at the end of 2014.

Marel achieved 15% revenue growth in 2015. Revenue was 819 million with 12.2%
adjusted EBIT or 100 million compared with 49 million in 2014 (6.8%). Net
profit for 2015 is 57 million compared with 12 million last year. Cash flow and
operational performance was strong leading to net debt/EBITDA at 1.05 at the
end of the year compared with 2.08 at the end of 2014. Marel is entering the
year 2016 with order book of 181 million compared with 175 million at the
beginning of 2015. 

Marel closed the acquisition of MPS on January 29, 2016. The purchase price is
382 million on a debt and cash-free basis. Preliminary numbers from MPS’
operation show revenue of 158 million in 2015 and EBITDA of 41 million. Orders
received were strong and totaled 190 million and MPS enters 2016 with order
book of 140 million. 

Marel has finalized long term all senior financing of an approximately 670
million with final maturity in November 2020. The financing is at favorable
terms in line with Marel´s financial strengths and current market conditions.
Initial interest terms are EURIBOR/LIBOR plus a margin of 275 basis points
which will vary in line with Marel’s leverage ratio (Net debt/EBITDA) at the
end of each quarter. Opening leverage post MPS acquisition is below 3x Net
debt/EBITDA. 

Marel’s earnings per share (EPS) in 2015 are 7.93 euro cents compared with 1.60
euro cents for 2014. The acquisition of MPS is expected to be highly accretive
and will enhance EPS going forward. The Board of Directors will propose to the
2016 Annual General Meeting that dividend of 1.58 euro cent per outstanding
share will be paid for 2015, corresponding to 11.3 million or approximately 20%
of net profit for the year. 

Pro-forma revenue for combined Marel and MPS in 2015 is 977 million with
estimated adjusted EBIT of 133 million. Pro-forma order book is around 320
million entering 2016 compared with 280 million at the beginning of the year
2015. Management expects modest organic revenue and EBIT growth in 2016
compared with 2015 on pro-forma basis, before purchase price allocation in
relation with the acquisition. 

Arni Oddur Thordarson, CEO:

“2015 was a great year for Marel. We successfully concluded our two year
refocusing program, rationalizing the product portfolio, optimizing our
manufacturing footprint and streamlining the operation. We managed to engage
even better with our customers while refocusing, resulting in a 15% increase in
revenue with 100 million in operating profits in 2015 compared with 49 million
in 2014. 

With the acquisition of MPS we further enhanced Marel’s position as a global
leading provider of advanced systems and services to the poultry, meat and fish
industries. In many ways we are now taking similar steps in the meat industry
as were taken eight years ago in the poultry industry with the Stork
acquisition, which stimulated organic growth and value creation for customers
and shareholders. 

Parallel to the acquisition of MPS we secured long term stable financing for
the whole company that will support operational and financial flexibility going
forward. We appreciate the continued trust from the banks that are supporting
Marel as the consolidator in the industry. 

MPS is concluding a great year just like Marel. Combined revenues last year
were 977 million with adjusted EBIT of 133 million. After a period of strong
growth, we expect modest organic growth in revenues and operating performance
in 2016”. 

Simpler, Smarter, Faster refocusing program

The two year Simpler, Smarter, Faster refocusing program was successfully
completed in 2015 resulting in increased sales, improved operational and net
profits and strong cash flow. The focus will now shift towards full potential
program with the aim of further operational improvements, continuous innovation
and focused investments to improve the business and support future growth and
value creation. 

During the two year refocusing program Marel managed to streamline the general
business, refocus its product portfolio, optimize the manufacturing footprint
and at the same time invest in further growth through innovation and advanced
business tools. During the program the manufacturing footprint was reduced from
19 to 9 location and employees were reduced by 200 while at the same time
revenue increased. 

From the beginning of the refocusing program, taking into account the proceeds
from sales of operations, the total cash-out cost of the refocusing program is
estimated at 16 million, with 35 million P/L effect for the same period,
thereof 4.3 million in Q4 2015.The refocusing cost in Q4 2015 is mainly due to
manufacturing optimization and the transfer of manufacturing activities from
Des Moines to Gainesville that were completed before year-end 2015. 

Further streamlining of operations will take place in 2016 such as the
streamlining of the operation in Seattle, U.S and in Marel’s further processing
segment, where the focus is on supporting poultry, meat and fish customers in
further value creation. 

Marel becomes a full-line supplier to the meat industry

Marel announced the closing of its acquisition of MPS meat processing systems
on January 29, 2016. The purchase price is 382 million on a debt and cash-free
basis. Agreement of the acquisition was announced on November 21, 2015 and the
closing was subject to anti-trust approvals that were obtained without
reservation in January 2016. 

United, the two companies will be at the forefront in developing full-line
solutions and equipment for the meat processing industry. They have a good
strategic and cultural fit with a highly complementary product portfolio and
geographic presence, creating a strong platform to enhance further growth. 

MPS is a leader in primary processing solutions for the pork and beef industry
as well as in innovative solutions in water treatment and food logistics. Under
the leadership of MPS’ management, MPS has shown solid growth and profitability
in recent periods. MPS has one of the largest installed bases in the industry
and a large global base of customers. 

The MPS acquisition enhances Marel’s position as a leading global provider of
advanced systems and solutions to the poultry, meat and fish industries and is
fully in line with the company’s previously announced growth strategy. This
step will contribute to a more balanced revenue split between industry segments
and geographies. On a pro-forma basis Marel’s meat segment will now contribute
close to 30% of revenue and EBITDA of Marel. 

Preliminary MPS results show revenue of 158 million in 2015 and EBITDA of 41
million. MPS accounts are based on Dutch GAAP and will be transferred to IFRS
in the first half of 2016. The results of 2016 will be affected by Purchase
Price Allocation which involves allocating the purchase price to various
balance sheet items including intangible assets. Orders received at MPS were
strong and amounted to 190 million resulting in order book of close to 140
million at the end of the year. 

Pro forma revenue for combined Marel and MPS is 977 million with estimated
adjusted EBIT of 133 million. Combined order book is estimated around 320
million entering 2016 compared with around 280 million at the beginning of the
year 2015. 

Marel’s advisory cost associated with the MPS acquisition is 3.3 million and is
fully accounted for in Q4 2015 results of Marel. 

Outlook

Combined pro-forma revenues of Marel and MPS last year were 977 million with
adjusted EBIT of 133 million. After a period of strong growth, Marel expects
modest organic growth in revenues and operating performance in 2016 compared
with 2015 on pro-forma basis, before purchase price allocation in relation with
the acquisition. 

A commercially strong product portfolio and focused market approach together
with tailwind in the market has driven strong revenue growth in recent
quarters. The industry that Marel operates in has a history of 4-6% annual
growth and it is expected that average annual growth will remain at that level
in the long term. Marel’s aim is to continue to grow faster than the market by
leveraging its market presence and with continuous investments in innovation. 

In the mid- and long-term, the company believes its innovative products and
global presence in all segments will secure good growth and increased
profitability. Results may vary from quarter to quarter due to general economic
developments, fluctuations in orders received and deliveries of larger systems. 

Presentation of results, February 4, 2016
Marel will present its results at an investor meeting on Thursday, February 4,
at 8:30 am (GMT), at the Company’s headquarters at Austurhraun 9, Gardabaer.
The meeting will also be webcasted at marel.com/webcast. 

Publication days of Consolidated Financial Statements in 2016


  --  1st quarter 2016   April 25, 2016
  --  2nd quarter 2016  July 27, 2016
  --  3rd quarter 2016   October 26, 2016
  --  4th quarter 2016   February 1, 2017


Release of financial statements will take place after market closing on the
aforementioned dates. 

For further information, contact:

Audbjorg Olafsdottir, Corporate Director of Investor Relations and
Communications, tel: (+354) 563 8626 / mobile: (+354) 853 8626.