GARDHABAER, Iceland, Nov. 3, 2005 (PRIMEZONE) -- Sales for the first six months of 2005 totalled EUR 94.3 million (ISK 7.5 billion), which is an increase of about 13.3% from the previous year.
Profit from operations (EBIT) during the period January to September 2005 was EUR 8.4 million, which is 9.0% of sales revenue, compared with EUR 9.2 million last year. Net profit was EUR 5.1 million, compared with EUR 6.1 million in 2004. Profit from operations (EBIT) in the third quarter was EUR 2.1 million (ISK 165 million), compared with 2.8 million (ISK 247 million) last year. Profit from operations in the third quarter 2005 is the next best in the company's history. Seasonal fluctuations have diminished with increased product standardisation. Net profit per share for the first nine months of 2005 was 2.21 euro cents, compared with 2.59 euro cents the previous year. The order book at the end of September 2005 was EUR 20 million, compared with just over EUR 21 million at the end of last June, and 16 million at the end of the third quarter in 2004.
Accounting policies are now fully compliant with IFRS, International Financial Reporting Standards. Comparative figures from the previous year have been adjusted to conform to the changes.
The quarterly report for the Marel Group for the period January to September 2005 was approved at Marel hf.'s Board of Directors meeting today, 3 November 2005.
The Marel Group at the end of September 2005 comprises 17 companies with operations in 12 countries. The newest, Marel Russia and Marel Spain, began operations in the second quarter of 2005.
The following are the main results from the consolidated financial statements for Marel:
Operations 3rd quarter in thous. of euros
Operating results 2005 2004 Sales 30,416 26,821 Cost of goods sold (20,655) (17,442) Contribution margin 9,761 9,379
Other operating income 246 93 Sales and marketing expenses (3,850) (2,985) Development expenses (1,683) (1,349) Administrative expenses (2,338) (2,305)
Profit from operations EBIT 2,136 2,833 Finance costs - net (778) (367) Profit before tax 1,358 2,466 Tax expense (127) (709) Net profit 1,231 1,757
EBITDA 3,399 3,941
Percent of sales Contribution margin 32.1% 35.0% Sales and marketing expenses 12.7% 11.1% Development expenses charged 5.5% 5.0% Administrative expenses 7.7% 8.6% EBITDA 11.2% 14.7% EBIT 7.0% 10.6% Net profit 4.0% 6.6%
Operations for first 9 months in thous. of euros
Operating results 2005 2004 Sales 94,254 83,179 Cost of goods sold (62,393) (52,765) Contribution margin 31,861 30,414
Other operating income 703 418 Sales and marketing expenses (11,654) (10,215) Development expenses (4,990) (4,455) Administrative expenses (7,474) (6,944)
Profit from operations EBIT 8,446 9,218 Finance costs - net (2,063) (1,172) Profit before tax 6,383 8,046 Tax expenses (1,247) (1,957) Net profit 5,136 6,089
EBITDA 12,050 12,527
Percent of sales Contribution margin 33.8% 36.6% Sales and marketing expenses 12.4% 12.3% Development expenses charged 5.3% 5.4% Administrative expenses 7.9% 8.3% EBITDA 12.8% 15.1% EBIT 9.0% 11.1% Net profit 5.4% 7.3%
Financial position at end of period 30.09.'05 31.12.'04 Total assets 107,028 95,482 Equity 37,231 33,263 Working capital 16,972 19,807
Cash flow first 9 months of year 2005 2004 Cash generated from operations 5,850 9,513 (Decrease)/increase in net cash 1,449 820 Net cash at end of period 5,407 5,459
Highlights at end of September 2005 2004 Return on owner's equity 20.6% 29.1% Current ratio 1.4 1.6 Quick ratio 0.7 0.8 Equity ratio 34.8% 34.8% Earnings per share in euro cents 2.21 2.59 Market cap. in millions of euros based on exchange rate on 30 September 211.8 151.1
Sales in the first nine months of 2005 totalled EUR 94.3 million (ISK 7.5 billion), compared with EUR 83.2 million (ISK 7.3 billion) the previous year. Sales have therefore increased by about 13.3%.
The contribution margin for the period was EUR 31.9 million or 33.8% of sales, compared with EUR 30.4 million or 36.6% of sales during the same period last year. This proportional decrease was foreseeable and is primarily attributed to an unfavourable exchange rate. Income in Icelandic krona was about 3% of the Group's total sales, while expenses were about 23%, chiefly employee wages in Iceland. The krona has strengthened by about 10% against the Euro from the average during the first nine months of 2004 to the same period in 2005.
Operating expenses other than cost of goods sold totalled EUR 24.1 million, which was 25.6% of sales, compared with 26.0% the year before. Sales and marketing expenses were EUR 11.7 million, which is about 14.1% more than the previous year.
Development expenses, including depreciation of product development expenses from previous years, were about EUR 5.0 million, an increase of about 12%. The primary emphasis in sales and marketing, as well as in product development, has been to improve productivity and synergy by increasing integration within the Marel Group, thereby supporting the company's growth objectives. Administrative costs were EUR 7.5 million, compared with 6.9 million the year before, an increase of about 8.7%. The Group's wage expenses totalled EUR 38.3 million, which is about 40.6% of sales, compared with 41.3% last year.
Profit from operations for the first nine months of 2005 was EUR 8.4 million or 9.0% of sales, compared with EUR 9.2 million in 2004.
The net finance costs totalled EUR 2.1 million, compared with EUR 1.2 million the previous year. The increase is in particular the result of currency exchange losses of about EUR 629 thousand. Also, interest rate of just over 40% of the company's debts has been fixed for 3 to 5 years.
Net profit of the Marel Group for the first three quarters of 2005 totalled EUR 5.1 million (ISK 408 million), compared with EUR 6.1 million (ISK 531 million) the previous year. The decrease is explained on the one hand by a lower contribution margin due to the exchange rate being unfavourable, and on the other by exchange rate losses in capital items. Total assets of the Marel Group at the end of September 2005 were booked at EUR 107.0 million, an increase of about 11.5 million or 12.1% from the New Year. This increase is mainly the result of increases in inventory and accounts receivable. Inventory increased by about EUR 3.0 million, and accounts receivable by about EUR 5.9 million from the New Year. These increases in inventory and accounts receivable are explained by an increase in turnover on the one hand, and many deliveries around and after the end of the quarter on the other. Investment in fixed assets in the first nine months of 2005 was EUR 2.3 million, compared with 1.1 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.
Cash generated from operations totalled EUR 5.9 million, compared with 9.5 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 3rd quarter 2005, cash generated from operations was EUR 5.4 million, which is virtually unchanged from the same period in 2004.
On average, 860 employees worked for the Marel Group during the period January to September 2005, compared with 846 for the same period the previous year. Of the 860 employees, 330 were employed in Iceland, while 530 were employed abroad at 15 companies in 11 countries. 5-year comparison
Key figures from Marel's operations for the 3rd quarter 2005
Thous. EUR 2005 2004 2003*) 2002*) 2001*) Sales 30,416 26,821 20,421 22,985 24,145 Profit from operations (EBIT) 2,136 2,833 1,135 (2,274) 431 EBIT as a % of sales 7.0% 10.6% 5.6% (9.9%) 1.8% Profit/(loss) 1,231 1,757 53 (2,413) (229)
Total assets at end of period 107,028 92,074 85,950 86,209 66,655 Equity at end of period 37,231 32,035 24,859 21,738 22,081 Working capital at end of period 16,972 18,084 18,027 10,948 16,696
Net cash from operating activities 3,138 3,361 (300) 1,811 1,946 Net cash at end of period 5,407 5,459 6,343 5,314 4,640
Current ratio 1,4 1,6 1,6 1,3 1,7 Quick ratio 0,7 0,8 0,8 0,7 1,0 Equity ratio 34.8% 34.8% 28.9% 25.2% 33.1%
Market cap, in millions of euros based on the exchange rate on 30 June 211,8 151,1 73,7 53,5 73,9
*) 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, eleven 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 9 months
Marel Marel
companies companies Carnitech Carnitech
Thous. EUR 2005 2004 2005 2004
Sales 53,436 45,912 40,818 37,267
Profit from operations, EBIT 7,053 6,947 1,393 2,271
EBIT as a % of sales 13.2% 15.1% 3.4% 6.1%
Profit 4,252 4,835 884 1,254
Number of employees at end of
period 467 415 415 442
Marel companies Sales by Marel companies during the period January to September 2005 was EUR 53.4 million, an increase of about 16.4% from the previous year. Profit from operations (EBIT) of Marel companies during the period was EUR 7.1 million or 13.2% of turnover.
The company's operations progressed well during the period despite the fact that its operational environment worsened considerably from the previous year 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 company's 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. The company will continue to pursue ways to rationalise operations, for example Pols' operations merged with its parent company last 1 September.
Carnitech
Carnitech's turnover was EUR 40.8 million for the first nine months of 2005, an increase of about 9.5%. Profit from operations (EBIT) was EUR 1.4 million, compared with EUR 2.3 million the previous year. Work is progressing on implementing significant organisational changes with the aim of improving operations, thereby bringing them into an acceptable state. These measures are intended to ensure that Carnitech's performance will become acceptable in 24 months, and show a profit from operations (EBIT) greater than 8% of turnover. It is anticipated that results from these measures will begin to impact on the company's performance during the second half of next year.
The primary measures being implemented are the following:
* A new subsidiary has become operational in Slovakia,
Carnitech/Marel s.r.o., which will take over part of Carnitech's
manufacturing operation. Slovakia's operational environment is
considered 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 .
* Carnitech purchased all shares in Dantech Food PTE Ltd. in
Singapore. The company primarily manufactures and sells
individual quick-freezing and other equipment for warm water
shrimp processing. That part of Carnitech which offers comparable
products has been consolidated with Dantech to improve
utilisation of fixed costs, and most manufacturing has been
transferred to Singapore where production costs are significantly
lower. Dantech will not impact on Marel's consolidated financial
statements until the fourth quarter 2005.
* 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 dealer of such equipment in the world. The merger will
become effective on 1 January 2006. This change will ensure
improved utilisation of fixed costs and better customer services.
Prospects
The group's order book at the end of the third quarter 2005 totalled EUR 20 million, compared with 16 million at the end of September 2004. Strong product development and the ongoing work over the years to strengthen marketing operations have placed the company in a strong competitive position. The outlook is for ongoing increases in turnover. Trends in exchange rates, however, have lately been unfavourable for the company. The strengthening of the Icelandic krona has resulted in increases in the company's Icelandic expenses, along with increases in domestic costs. Forward short-term exchange rate contracts have reduced the effects of exchange rate changes, but they are no longer having an impact.
Short-term prospects are therefore difficult, and it is considered problematic to sustain the contribution margin's current level over the coming months. However, realisation efforts will counteract these unfavourable conditions. Over the long term, however, prospects are positive for a correction in the Icelandic krona's exchange rate, in addition to new production components being well positioned in an advantageous operational environment, effective rationalisation measures bringing results and operations at Carnitech improving.
The Financial Statement for 2005
Marel will publish its Financial Statements for 2005 on 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 third quarter 2005 at a meeting on Friday 4 November at 8:30 AM at company headquarters at Austurhraun 9 in Gardhabaer, Iceland.
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