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2009-05-06 19:04:25 CEST 2009-05-06 19:05:35 CEST REGULATED INFORMATION Marel Food Systems hf. - Financial Statement ReleaseMarel Food Systems hf. Q1 2009 Financial resultsGood cash flow despite postponement of large projects by customers Results from core business • Revenues from core activities totalled EUR 103.2 mln, compared to a record Q1 2008 (EUR 140.5 mln), a decrease of 27%. The drop in revenues is a consequence of low order intake at the height of the financial crisis in the second half of 2008. • Operating loss (EBIT) from core business before restructuring charges was EUR 1.7 mln (Q1 2008: profit of EUR 13.4 mln). One-off costs related to restructuring were EUR 3.5 mln. EBITDA was EUR 0.4 mln. (Q1 2008: EUR 18.4 mln). Marel Food Systems' core business is to provide equipment and systems for the poultry, fish and meat processing industries worldwide. The salmon and freezing parts of Carnitech, as well as its U.S. operations, are now operated under the Marel name and management. Defined now as non-core business are Food and Dairy Systems (F&D), Scanvaegt Nordic and the remaining operations of Carnitech. Redefined turnover of core business in 2008 amounts to EUR 548 mln. Consolidated results • Consolidated revenues totalled EUR 130.3 mln, compared to EUR 74.0 mln in Q1 2008, an increase of 76%. Net losses after taxes are EUR 7.0 mln (Q1 2008: profit of EUR 0.7 mln). • Due to strong operating cash flow of EUR 16.8 mln (Q1 2008: EUR 1.8 mln) and limited capital expenditure, the cash position increased from EUR 21 mln to EUR 33 mln. • Net interest bearing debt amounts to EUR 373 mln (Q4 2008: EUR 379 mln). The average maturity of debt is about four years. Outlook is positive • In Q2 2009, the company has disposed of non-core business assets for a total of EUR 37.5 mln, of which EUR 35 mln will be paid in cash, and for a profit in excess of EUR 10 mln. • Market trends are favourable with rising poultry and fish prices at the same time as major cost items such as corn and oil prices are falling and interest rates are at historical lows. • Total sales in April are very satisfactory with sales of standard equipment at record high levels. Sales translate into revenues in 4-8 months. • Revenues in 2010 are expected to be back at the same level as they were in 2008. Due to extensive rationalization measures, the company will then be operating at a sustainable lower cost base. The company target is to continue to grow above the market rate and deliver an EBIT margin above 10%. Theo Hoen, CEO: “The operational results for the first quarter of the year continue to reflect the effects of the international financial crisis. As expected, our customers continued to find it difficult to finance investments in large systems. However, the effects of the current market conditions on our spare parts business and the sale of standard machines have been limited. We see strong indications that sales are picking up. In the United States, in particular, there are clear signs that a recovery is underway. Since it takes 4-8 months for sales to translate into revenues, the improvement in revenues will be gradual during the course of the year. We have responded to the slowdown in order intake by cutting costs. The measures implemented in Q4 2008 and Q1 - including a 12% reduction in the number of employees from a year ago - will begin to be reflected in lower costs in Q2. There are two areas that we have left untouched - our innovation capacity and our global sales and service network, the two pillars of our strategy for future growth and value creation. The long-term prospects of the business remain excellent and the underlying growth in the industry is strong. Protein consumption continues to grow and our customers are making profits. They rely on us to develop the products that enable them to capture the growth in the most profitable way. We are confident that once the market turns, we will achieve our objectives of growth above the market average and an EBIT of more than 10% compared to sales. With the rationalization measures we have undertaken, the company will emerge even stronger than before once the crisis subsides.” Prospects Global financial and market conditions continue to impact Marel Food Systems' operations, particularly the sale of larger systems and installations, often for new factories. The sale of such systems normally accounts for approximately one-third of the company's revenues. Marel Food Systems' customers have had difficulty in obtaining financing for such projects. Since these projects have been postponed rather than cancelled, it is likely that an accumulated need will have built up by the time that conditions in the financial markets improve. In the last few months, we have seen slow but gradual improvements in a few of our key markets, following what seem to be a general improvement in the global financial markets. In the U.S. in particular, Marel Food Systems' largest market, there are clear signs that a recovery is underway. Sales for the month of April in the U.S. are at a record high and there are positive signs in the underlying business trends. These results correspond well with general market conditions. Measures of U.S. manufacturing and consumer confidence for April jumped to their highest levels since the credit crisis intensified in September. While the economic slump is expected to persist for the coming months, the figures are seen as a clear sign that efforts to lower borrowing costs and unclog lending are beginning to pay off. In the food industry specifically, the trends in consumer behaviour are developing as expected. Consumers are eating out less at mid- and high-priced restaurants and choosing instead to go to fast food outlets or purchase low-cost ready-made meals at discount supermarkets. As a result, companies like Aldi, Lidl and McDonald's are seeing an increase in sales and operating profits. Marel Food Systems' customers, the food processors who supply these outlets with products, are also benefitting. They are running their processing lines at the same level as before the crisis and they are using the same amount of parts and service as before. This is significant since spare parts and service, which the financial crisis has affected to only a limited degree, normally account for about 35% of the Marel Food Systems' revenues. The sale of standard equipment and smaller systems, which normally accounts for another 35% of revenues, is also going well and has not been affected to a significant degree by the financial crisis. Customers are continuing to invest in such equipment as long as the payback time is under two years and they have clearly identifiable advantages for the customer. With its unique and innovative product range in this category, Marel Food Systems has a clear competitive advantage vis-à-vis its competitors. It is Marel Food Systems' expectation that the company's cash flow will remain positive through the course of the year. Sales and operating results are expected to improve slightly in the latter part of the year as market conditions improve. The drop in corn prices and base interest rates is likely to make it easier in the months to come for food processing companies to make the investment required to be able to respond to changing consumer demands. Presentation of results 7 May 2009 Marel Food Systems will present performance results at a meeting on Thursday, 7 May 2009, at 8:30 a.m., at the company‘s headquarters at Austurhraun 9, Gardabaer. Publication days of the Consolidated Financial Statements in 2009 and the Annual General Meeting 2010 Publication dates of the Financial Statements for 2009: 2nd quarter 6 August 2009 3rd quarter 3 November 2009 4th quarter 4 February 2010 Annual General Meeting of Marel Food Systems hf 3 March 2010 For further information, contact: Erik Kaman, CFO Tel: (+354) 563-8000 Sigsteinn Grétarsson, Managing Director of Marel ehf. Tel: (+354) 563-8000 |
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