GARDHABAER, Iceland, Aug. 9, 2005 (PRIMEZONE) -- Sales for the first six months of 2005 totalled EUR 63.8 million (ISK 5.1 billion), which is an increase of about 13.3% from the previous year.
Profit from operations EBIT for the first half of 2005 was EUR 6.3 million, which is 9.9% of sales revenue. Net profit for the period was EUR 3.9 million, compared with EUR 4.3 million in 2004.
Profit from operations EBIT during the second quarter was EUR 3.3 million (ISK 262 million), compared with EUR 4.1 million (ISK 355 million) last year. The profit from operations EBIT during the second quarter 2005 is the next highest in the company's history.
Net profit per share was 1.67 euro cent, compared with 1.83 euro cent the previous year.
The order book at the end of June 2005 was about EUR 21 million, compared with EUR 18 million at the end of June 2004.
Accounting policies are now fully compliant with IFRS, International Financial Reporting Standards. Comparative figures from previous years have been adjusted to conform to the changes.9 August 2005 The financial statements for the Marel Group for the first half of 2005 were approved at Marel hf.'s Board of Directors meeting today, 9 August 2005. The Marel Group comprises 16 companies with operations in 11 countries. The newest company, Marel Russland, began operations in the 2nd quarter of 2005.
The following are the main results from the consolidated financial statements for Marel:
Operations 2nd quarter in thousands of euros
Operating results 2005 2004 Sales 33,910 31,286 Cost of sales (22,329) (19,485) Gross profit 11,581 11,801 Other operating income 327 163 Sales and marketing expenses (4,126) (3,710) Development expenses (1,613) (1,557) Administrative expenses (2,915) (2,621) Profit from operations EBIT 3,254 4,076 Finance costs - net (413) (428) Profit before tax 2,841 3,648 Tax expense (737) (832) Net profit 2,104 2,816 EBITDA 4,469 5,185 Percent of sales Gross profit 34.2% 37.7% Sales and marketing expenses 12.2% 11.9% Development expenses 4.8% 5.0% Administrative costs 8.6% 8.4% EBITDA 13.2% 16.6% EBIT 9.6% 13.0% Net profit 6.2% 9.0% Operations 1st half of year in thousands of euros Operating results 2005 2004 Sales 63,838 56,358 Cost of sales (41,738) (35,323) Gross profit 22,100 21,035 Other operating income 457 325 Sales and marketing expenses (7,804) (7,230) Development expenses (3,307) (3,106) Administrative expenses (5,136) (4,639) Profit before operations EBIT 6,310 6,385 Finance costs - net (1,285) (805) Profit before tax 5,025 5,580 Tax expense (1,120) (1,248) Net profit 3,905 4,332 EBITDA 8,649 8,587 Percent of sales Gross profit 34.6% 37.3% Sales and marketing expenses 12.2% 12.8% Development expenses 5.2% 5.5% Administrative expenses 8.0% 8.2% EBITDA 13.5% 15.2% EBIT 9.9% 11.3% Net profit 6.1% 7.7% Financial position at end of period 30.06.'05 31.12.'04 Total assets 104,774 95,482 Equity 37,048 33,263 Working capital 18,028 19,807 Cash flow first half of year 2005 2004 Cash generated from operations 2,712 6,152 (Decrease)/increase in net cash (125) 1.563 Net cash at end of period 3,990 6,278 Highlights at end of June 2005 2004 Return on owner's equity 23.5% 31.1% Current ratio 1.5 1.6 Quick ratio 0.6 0.8 Equity ratio 35.4% 34.1% Earnings per share in euro cent 1.67 1.83 Market cap. in millions of euros based on exchange rate at end of June 179.2 132.4
Sales in the first six months of 2005 totalled EUR 63.8 million (ISK 5.1 billion), compared with EUR 56.4 million (ISK 4.9 billion) the previous year. Sales have therefore increased by 13,3%. On a fixed exchange rate between the years, sales have increased by about 15%.
The gross margin for the period was EUR 22.1 million, or 34.6% of sales, compared with EUR 21.0 million or 37.3% of sales the year before. This proportional decrease was foreseeable and is primarily attributed to an unfavourable exchange rate. Income in Icelandic krona was about 2% of the Group's total sales, while expenses were about 22%, chiefly employee wages in Iceland. The krona has strengthened by about 9% against the Euro from the average during the first six months of 2004 to the same period in 2005.
Operating expenses other than cost of sales totalled EUR 16.2 million, which was 25.5% of sales compared with 26.6% the year before. Sales and marketing expenses were EUR 7.8 million, which is about 7.9% more than the previous year.
Development expenses, including depreciation of product development expenses from previous years, were about EUR 3.3 million, an increase of about 6.5%. The primary emphasis in sales and marketing, as well as in product development, has been to improve productivity and synergy, and to increase integration within the Marel Group. Administrative costs were EUR 5.1 million, compared with 4.6 million the year before, an increase of about10.7%. Profit from operations was EUR 6.3 million, or 9.9% of sales, compared with 11.3% in 2004.
Net finance costs totalled EUR 1.3 million, compared with EUR 0.8 million the previous year. The increase is in particular the result of currency exchange losses during the first quarter of 2005.
Net profit of the Marel Group for the first half of 2005 totalled EUR 3.9 million (ISK 314 million), compared with EUR 4.3 million (ISK 378 million) the previous year. The exchange rate has been unfavourable for the company, particularly the rate of the Icelandic krona and the exchange rate between the Euro and the USD. Despite this disadvantageous development acceptable results have been attained, which may be attributed to rationalisation measures and the effects of increased synergy within the Group.
Total assets of the Marel Group at the end of June 2005 were booked at EUR 104.8 million, an increase of 9.3 million or 9.7% from the New Year. This increase is mainly the result of increases in inventory and accounts receivable. Inventory increased by EUR 2.4 million or 11%. Accounts receivable increased by EUR 4 million, or 25% from the New Year. This increase in inventory and accounts receivable is explained by an increase in turnover on the one hand, and many deliveries around and after the end of the second quarter on the other. Investment in fixed assets in the first half of 2005 was EUR 1.6 million, compared with 0.7 million during the same period last year. Part of investment during this period may be attributed to estimated investment for 2004 having been moved forward to this year. Net cash from operating activities totalled EUR 2.7 million, compared with 6.1 million the year before. The main reason for this is increased financial commitment in inventory and accounts receivable, but this is partially offset by an increase in accounts payable. At the end of the 2nd quarter of 2005, cash and cash equivalents were EUR 4.0 million, compared with 6.3 million at the end of June 2004. On average, 851 employees worked for the Marel Group during the first half of 2005, compared to 813 for the same period in 2003. Of the 851 employees, 322 were employed in Iceland, while 529 were employed abroad at 14 companies in 10 countries.
5-year comparison
Key figures from Marel's operations for the 2nd quarter
Thous. EUR 2005 2004 2003*) 2002*) 2001*) Sales 33,910 31,286 30,359 26,301 22,099 Profit from operations 3,254 4,076 2,723 1,412 3,089 EBIT as a % of sales 9.6% 13.0% 9.0% 5.4% 14.0% Net profit 2,104 2,816 1,735 803 1,134 Total assets at end of period 104,774 94,936 87,237 82,361 63,956 Equity at end of period 37,048 32,366 24,199 24,003 23,718 Working capital at end of period 18,028 18,816 11,654 10,096 24,388 Net cash from operating 1,226 2,303 1,021 2,194 784 activities Net cash at end of period 3,990 6,278 6,043 2,704 7,231 Current ratio 1.5 1.6 1.3 1.3 2.3 Quick ratio 0.6 0.8 0.7 0.7 1.4 Equity ratio 35.4% 34.1% 27.7% 29.1% 37.1% Market cap. in millions of euros based on the exchange rate on 30 June 179.2 132.4 51.5 58.6 63.7
*) Previous presentation that is not in conformity with IFRS Overview of the Group's main elements The Marel Group comprises two principal operations: Marel companies with headquarters located in Iceland, ten sales and services offices, and Pols hf. on the one hand, and Carnitech a/s and its 3 subsidiaries on the other. The following is a synopsis of the main elements of each operation:
Key figures from the operations of Marel and Carnitech for the first 6 months
Marel
Marel companies companies Carnitech Carnitech
Thous. EUR 2005 2004 2005 2004
Sales 36,752 32,705 27,086 23,653
Profit from
operations, EBIT 5,387 5,707 923 678
EBIT as a % of
sales 14.7% 17.4% 3.4% 2.9%
Profit 3,254 4,060 651 272
Employees at end of
period 448 422 413 429
Marel companies
Sales by Marel companies in the first half of 2005 were EUR 36.8 million, an increase of 12.4% from the previous year. Profit from operations (EBIT) of Marel companies during the period was EUR 5.4 million, a decrease of about 5.6% from the year before. It should be kept in mind with this comparison that the performance for the first 6 months of 2004 was the best in Marel's history.
The company's operations were good during the period January to June 2005, despite the fact that its operational environment worsened considerably because of the strengthening Icelandic krona and considerable cost increases in Iceland. This unfavourable development, along with stiff competition on markets, creates considerable pressure on the contribution margin. To combat this, the company has implemented diverse rationalisation measures, for example standardising products, making organisational changes, and moving part of purchasing and subcontracting to Asia and East Europe.
Carnitech
Carnitech's sales were EUR 27.1 million during the first half of 2005, an increase of about 14.5%. Profit from operations (EBIT) was EUR 0.9 million, an increase of about 36% from the year before. During the second quarter, Carnitech's EBIT was 6.4% of sales. New product lines for the salmon and meat industries have been well received by customers, but their production costs are still high, resulting in a lower contribution margin. It is expected that it will take some time before Carnitech's performance becomes satisfactory.
Rationalisation measures
Good results from rationalisation measures have been attained in recent quarters, which have resulted in improved performance despite an external operational environment that has temporarily worsened. There are still appreciable opportunities for rationalisation in most areas of company operations. The main additional measures that will be implemented are the following:
-- It has been decided to merge the operation of CP-Food/Geba with Carnitech. This will create a strong entity within Carnitech that specialises in equipment for salmon processing, and will be the largest supplier of salmon processing equipment in the world. The merger will take place on 1 January 2006. This change will ensure improved utilisation of fixed costs and better customer services.
-- It has been decided to merge Marel Deutschland and Marel TVM under the name Marel Deutschland. This will create a strong sales and service company in Germany, leading to improved utilisation of fixed costs and improved customer services.
-- On 1 October 2005 a new subsidiary will become operational in Slovakia, Carnitech/Marel s.r.o., which will manufacture components and products for both Marel and Carnitech. Slovakia's operational environment is very economical for industrial companies. The country is a member of the EC, has a long industrial tradition, the level of education is very good, and costs are economical. Further rationalisation measures will be announced in the coming months.
Prospects
The group's order book at the end of the second quarter of 2005 totalled EUR 21 million, compared with 18 million at the end of June 2004. Strong product development and the ongoing work over the years to strengthen marketing operations have placed the company in a stronger competitive position. The outlook is for continued increases in turnover.
Trends in exchange rates, however, have been unfavourable for the company at this time. The strengthening of the Icelandic krona has resulted in increases in the company's Icelandic expenses, while the weaker dollar against the euro has resulted in decreased income. Forward short-term exchange rate contracts have reduced the affects of exchange rate changes, but their affect is now minimal at best. Short-term prospects are therefore difficult, and it is considered difficult to increase the current contribution margin over the coming months. Over the long term prospects are good, considering the correction of the Icelandic krona's exchange rate, new production facilities in an advantageous operational environment, results from rationalisation measures, and improved operations at Carnitech when the new product lines have become established.
Consolidated Financial Statement publishing for 2005 Marel will publish the Financial Statements for 2005 on the following days:
3rd quarter: Thursday 3 November 2005 4th quarter: Tuesday 7 February 2006
The Annual General Meeting for Marel hf. is scheduled for Tuesday 28 February 2006.
Marel will present performance results for the second quarter of 2005 at a meeting on Wednesday 10 August 2005 at 8:30 AM at company headquarters at Austurhraun 9 in Gardhabaer, Iceland.
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