Marel hf. - Financial Statement Release

Marel:Q3 2015 Results -Strong order intake and robust operational performance

  --  Revenue for Q3 2015 totaled 189.1m [Q3 2014:187.9m].
  --  Adjusted EBITDA* for Q3 2015 was 31.6m or 16.7% of revenue [Q3 2014:
     25.9m]. EBITDA was 29.7m or 15.7% of revenue [Q3 2014: 24.6m].
  --  Adjusted EBIT* for Q3 2015 was 24.2m or 12.8% of revenue [Q3 2014:
     17.4m]. EBIT was 22.2m or 11.7% of revenue [Q3 2014: 16.1m].
  --  Net result for Q3 2015 was 14.7m [Q3 2014: 9.8m]. Earnings per share were
     2.07 euro cents in Q3 2015 compared with 1.34 euro cents in Q3 2014.
  --  Cash flow from operating activities before interest and tax was 29.7m [Q3
     2014: 29.7m]. Net interest bearing debt was 150.3m [Q3 2014: 191.3m].
  --  The order book was at 187.7m at the end of the quarter compared with
     165.9m at the end of Q2 2015 [Q3 2014: 169.2m].

Order intake was strong in Q3 at 211 million. The order intake is well balanced
geographically and consists of medium and large size greenfield projects with
good growth in the modernization and maintenance business. 

Revenue in the first nine months of the year was 617 million and adjusted EBIT
78 million (12.6%) compared with revenues of 513 million and adjusted EBIT of
33 million (6.4%) for the same period last year. Revenues in 2014 include 30
million low margin operations that were sold or discontinued early in 2015.
Cash flow and operational performance is strong leading to net debt/EBITDA at
1.1 at the end of the quarter. 

A commercially strong product portfolio and focused market approach together
with tailwind in the market has driven strong revenue growth in recent
quarters. Near term it is expected that market conditions will normalize after
a period of strong growth. 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 sustain above market growth by
leveraging its market presence and with continuous investments in innovation. 

Arni Oddur Thordarson, CEO:
“Marel had an excellent third quarter with strong order received and robust
operational performance. We have focused our product portfolio and optimized
our manufacturing footprint leading to more dynamic and cost efficient
operations that is delivering those results.  I would specially want to thank
our great team for their dedication and commitment in reshaping the business at
the same time as we are focused on serving the customers' needs better than
ever. 

With a focused market approach and strong product portfolio, Marel has achieved
6% annual organic revenue growth after the acquisition of Stork Food Systems in
2008. At the same time earnings per share have grown by 20% annually. This was
achieved during turbulent times in world economy reflecting Marel's strength
and future potential. 

The Marel team is committed to making food production more sustainable and cost
effective. The goal is always the same; to increase customer and shareholder
long-term value”. 

Simpler, Smarter, Faster refocusing program
The two year Simpler, Smarter, Faster program is fully on track and nearing its
completion date at year-end 2015. The program focuses on simplifying the
company's market approach to better serve customer needs and on streamlining
operations to increase quality and efficiency in the company, while lowering
the recurring cost base. Marel has streamlined its operations and focused its
product portfolio leading to the discontinuation of low margin business that
accounts for 30 million revenue annually and is, since Q2 2015, not included in
the accounts. 

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 14 million, with 30 million P/L effect for the same period,
thereof 2 million in Q3 2015. The refocusing cost in Q3 2015 is due to ongoing
manufacturing optimization and the transfer of manufacturing activities from
Des Moines to Gainesville in the U.S. and from Bornholm to Aarhus in Denmark;
these activities are expected to be finalized before year-end. 

The total cash-out costs related to refocusing actions are estimated to remain
under 25 million over the total refocusing period. 

Markets
Market conditions in Marel's main markets remained good during Q3 2015,
resulting in strong order intake during the quarter. Marel's poultry segment
showed excellent operational performance, while the meat and fish segments
showed good operational improvements. Marel is currently refocusing and
investing in the further processing segment to support poultry, meat and fish
customers in further value creation to return healthy future profitability. 

Poultry
Marel's poultry segment had a very good first nine months of the year, with
strong operational profit margins and volumes. The poultry segment generated
337 million in revenue and adjusted EBIT of 60 million (17.8% of revenue) in
the first nine months of 2015. Market conditions in poultry remained favorable
in Q3. Projects during the quarter were well distributed geographically and
between different product types and sizes, including large projects in Germany
and Italy. The quarter also saw the segment's first sale to Senegal, reflecting
Marel's growing presence in West Africa. 
During the quarter, Marel's poultry segment participated in exhibitions in
Poland, Ecuador and Brazil, where Marel presented its latest innovative
solutions for the poultry industry. 

Fish
Marel's fish segment continues on track both in the whitefish and salmon
divisions. The fish segment generated 104 million in revenue and adjusted EBIT
of 9.7 million (9.3% of revenue) in the first nine months of 2015.  Market
conditions in salmon remain favorable, particularly in Scandinavia and the
U.K., where producers are benefitting from improving margins. Conditions for
whitefish are also positive and are expected to continue to improve. The
FleXiCut Waterjet cutter continues to impress customers and has generated
considerable attention following successful development projects in Iceland. 

During the quarter, Marel's fish segment exhibited its latest solutions and
equipment for the fish industry at several international events. At AquaNor in
Norway the highlight was the revolutionary MS2730 salmon filleting machine with
back and belly trim tools. The I-Cut 130 portion was on display at the VietFish
exhibition in Vietnam. The VietFish exhibition led to a breakthrough sale into
the pangasius segment in Vietnam. 

Meat
Marel's meat segment generated 91 million in revenue and adjusted EBIT of 8.4
million (9.2% of revenue) in the first nine months of 2015, which is a
significant improvement compared to previous years. 

During the quarter, Marel's meat segment secured good order intake with good
product and geographical mix. A landmark order was secured in Mexico during the
quarter and a deboning project was sold to China. 

It is expected that product mix will lead to a lower profitability in Q4 than
what is seen year-to-date in Marel's meat segment. 

Further Processing
Marel's further processing segment generated 76 million in revenue with
negative adjusted EBIT of 2 million (-2.6% of revenue) in the first nine months
of 2015. Profitability is expected to be at a low level in the coming quarters. 

During the quarter, further processing held a successful event in its demo
center in Boxmeer where four different product lines were exhibited to over 150
customers. 

Marel is currently refocusing and investing in the further processing segment
to support poultry, meat and fish customers in further value creation to return
healthy future profitability in the further processing segment for Marel.
Innovation efforts will be stepped up and further streamlining will take place
in order to increase profitability going forward. 

Financial items

Cash flow
Operational cash flow before interest and tax is 29.7 million for Q3 2015 or at
the same level as in Q3 2014. Total operating working capital stayed flat
during the quarter and slightly increased compared to year-end 2014 due to an
increase in business volume, timing of delivery and payment of orders. Marel
returned a healthy cash flow from its operations. 

In Q3 2015, Marel acquired 10.0 million treasury shares for a total amount of
13.8 million. This purchase was made after the Board of Directors of Marel hf.
authorized management to purchase up to 25 million own shares to be used as
payment for potential future acquisitions, per the company's announcement on
April 29, 2015. The authorization has now been fully utilized. Marel now holds
31.7 million treasury shares. There are 11.4 million outstanding stock options
at the end of Q3 2015. 

Financing
The balance sheet is healthy and net interest bearing debt amounts to 150.3
million in Q3 2015, compared with 191.3 million in Q3 2014. Strong EBITDA and
cash flow results in a total net leverage ratio of 1.1 at the end of Q3 2015
compared to 1.2 at the end of Q2 2015 and 2.1 at the end of Q4 2014. 

The strong financial position with net debt/EBITDA at 1.1 enables Marel to
further stimulate growth and strengthen its competitive position. 


Outlook
A commercially strong product portfolio and focused market approach together
with tailwind in the market has driven strong revenue growth in recent
quarters. Near term it is expected that market conditions will normalize after
a period of strong growth. 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, October 29, 2015
Marel will present its results at an investor meeting on Thursday, October 29,
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:



  --  4th quarter 2015   February 3, 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.

Priedai:

Microsoft Word - Marel Q32015 Press Release_Final_PDF.pdf

Final financial statements Q3 2015.pdf