• Sales for Marel Food Systems in the first quarter 2007 totaled EUR 72.2
million, compared with EUR 32.5 million for the same period the year before,
which is more than double (123%). Since the first quarter 2006, the companies
AEW Delford Systems and Scanvægt have been added, on 7 April and 4 August
respectively.
• A “Proforma” sales increase from the first quarter 2006 amounts to 9.6%.
• Profit from operations EBIT during the first quarter 2007 was EUR 3.2
million, which is 4.5% of income compared with 0.5 million last year.
• Charged one-time expenses resulting from integration totaled about EUR 3.2
million in the first quarter. Profit from operations EBIT, before one-time
expenses, was EUR 6.4 million (8.9% of sales).
• Net profit for the first quarter totaled about EUR 1.0 million.
• Cash generated from operations totaled EUR 5.2 million, compared with 8.2
million that went to operations in the first quarter 2006.
• Net cash at end of the period totaled EUR 58.2 million.
• Equity totaled EUR 146 million, and the equity ratio was 39.2% at the end of
March 2007. The company is well financed to enable it to continue developing
opportunities for external growth.
Hörður Arnarson, CEO:
“The year 2007 has begun well for Marel Food Systems. Integration in the
operations of Marel, Carnitech, Scanvægt and AEW/Delford are progressing
according to schedule, and important phases have been achieved in restructuring
the companies' sales and marketing networks. Work is now progressing on
synchronizing the companies' product mix and product development. Although
significant results have been attained in the integration of the companies,
there is still considerable work ahead in order to fully realize the
synergistic effects.
The company's performance and cash flow have improved significantly from last
year. It is gratifying to see that the company's strong organic growth is
ongoing at the same time as employees have been engaged in a complex
integration process.”
Prospects
Prospects on all of the company‘s main markets are good. Significant
investments by its customers are impending in the coming months and operational
prospects are therefore considered good. The consolidation of Marel,
Carnitech, AEW/Delford and Scanvægt will create a company with a broad product
range, strong marketing network, outstanding service network and a unique
position in various product categories. The integration of the companies' is
proceeding well and will generate significant operational rationalization,
which will begin impacting the company's performance in the second half of
2007. Coordinating product development will double the number of new products
that the company markets every year, and will support the company's strong
internal growth. The economy of scale of the new company is considerable, for
example in purchasing and production.
In the short term, integration work will have somewhat of an impact on company
operations, with one-time expenses estimated at EUR 1-1.5 million in the next
quarter. It is now projected that one-time costs for 2007 will be somewhat
lower than previously thought, or about EUR 4.2-4.7 million instead of EUR 5-6
million, all of which will occur in the first half of the year.
Sales for the first quarter 2007 totaled EUR 72.2 million, compared with EUR
32.5 million the previous year. Sales have therefore increased by about 123%.
A “Proforma” sales increase from the first quarter 2007 and 2006 amounts to
9.6%.
The contribution margin of product sales during the period was EUR 25.4
million, or 35.2% of sales, compared with EUR 10.4 million or 32.0% of sales
during the same time in 2006. Revenue in Icelandic króna was about 1% of the
Group's total sales, but expenses were about 12% particularly because of
employee wages in Iceland. The company has entered into forward exchange rate
contracts to offset all estimated costs in Icelandic króna until March 2008.
The average exchange rate of these contracts from January to March 2007 was
just over ISK/EUR 94, and from April 2007 to March 2008 it is just under
ISK/EUR 102.
Operating expenses other than the cost of goods sold totaled EUR 22.6 million
and were 31.2% of sales, compared with 31.4% the previous year. Sales &
marketing expenses were EUR 10.5 million, which is about 116% higher than last
year. Charged development expenses, including depreciation of product
development costs from previous years, were about EUR 3.6 million, an increase
of about 118%. 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. Administrative costs were EUR 8.4 million,
compared with 3.7 million the year before. The increase may in part be
attributed to the affect of charged integration expenses, which totaled about
3.2 million krona.
Profit from operations (EBIT) was EUR 3.2 million or 4.5% of sales, compared
with 1.4% in 2006. Excluding one-time expenses, EBIT totaled about 8.9% of
sales.
Net finance costs totaled EUR 1.2 million. Marel's share in the operational
loss of associated companies totaled 0.3 million, which may be attributed to
investment by LME ehf in Stork NV, and Marel owns 20% in LME. LME currently
owns 8% of Stork NV's shares.
Profit of Marel Food Systems in the first quarter 2007 totaled EUR 1.0 million,
compared with EUR 0.5 million the previous year.
Total assets of the Group at the end of March 2007 were charged at EUR 373
million, an increase of about 2.2% since the New Year. Inventory and accounts
receivable increased about EUR 8 million from the New Year 2007, while accounts
payable increased about 10.5 million for the same period. The equity ratio was
39.2% at the end of March 2007, compared with 39.6% at year-end 2006.
Investment in property, plant and equipment in excess of that sold in the first
quarter of 2007 was EUR 1.0 million, compared with EUR 2.5 million during the
same period last year.
There has been considerable improvement in working capital provided by
operating activities, which was in the plus by about EUR 4.5 million compared
with being in the minus by about EUR 2.6 million during the same time last
year. The same holds true for net cash from operating activities, which totaled
EUR 5.2 million, which is a EUR 13.3 million turnaround from the same period
last year. At the end of March 2007, the company's net cash totaled EUR 58
million, compared with 63 million at year-end 2006. The main reason for the
decrease is the repayment of interest-bearing short-term loans.
On average, 2,069 employees worked for the Marel Group during the first quarter
2007, compared with 1,021 last year. At year-end 2006, employees totaled 2,116.
Of these 2,069 employees, 357 were in Iceland while 1,712 worked outside
Iceland in 34 companies in 21 countries.
Key events during the period
Integration activities
The integration of AEW/Delford and Scanvægt with Marel is proceeding well and
according to schedule. The task, which addresses all elements of the companies'
operations, is slated to conclude in August 2008. One of the most extensive
tasks entails integrating their sales and marketing networks. The companies'
sales offices will decrease from 45 to about 20. This will strengthen the
company's sales efforts while significantly reducing operating costs.
Integration of the sales and marketing network is winding up and expected to
conclude during the current quarter. During the last quarter work began on
integrating the companies' product lines and product development. This work,
which is expected to take about 12-18 months, will lead to significant
rationalization by reducing costs while increasing the supply of new products.
Work is also proceeding on integrating and rationalizing the companies' service
network, production and purchasing. One-time expenses connected with the
changes have been in line with projections, and in 2006 they were EUR 4
million. One-time expenses connected with the changes were about EUR 4 million
in 2006. It is now anticipated that one-time expenses for 2007 will be somewhat
lower than previously thought, or about EUR 4.5-5 million, of which 3.2 million
was charged in the first quarter. The affect of integration measures, which are
expected to increase Marel Food Systems' annual operational profit by about EUR
15 million, will start impacting the company's performance during the second
half of 2007, and be fully felt during 2008.
External growth
In line with the company's strategy announced at the AGM in February 2006 it
intents to become a market leader by growing its market share from 4% to
15-20%. The company's share of the market is currently about 8%. Company
growth is equally focused on external growth and vigorous organic growth. The
company is presently looking at 2-4 substantial merger prospects. For some time
Marel Food Systems has been engaged in extensive discussions with the
management of Stork NV regarding the purchase of Stork Food Systems, without
their having led to formal negotiations.
Marel Food Systems has both the marketing and technological strength to enable
it to create opportunities for significant synergistic affects through external
growth. The company is well financed, which enables it to develop opportunities
in the coming months with robust support from its largest shareholders. Marel
Food Systems will examine the possibility of purchasing available companies
that fit well with the company's operations.
Shares listed in euros
At Marel hf‘s AGM on 8 March, authorization was approved for the Board to list
company shares in euros. Preparations are in progress with the objective of
listing them in euros by year-end 2007.
Presentation of Results
Marel Food Systems will present performance results at a meeting on Wednesday 9
May 2007 at 8:30 in the company's headquarters at Austurhraun 9 in Garðabær,
Iceland.
Publication days of the Consolidated Financial Statements in 2007 and the
Annual General Meeting 2008.
Marel Food Systems will publish the Financial Statements for 2007 on the
following days:
Interim Financial Statement - 2nd quarter 2007 10 August 2007
Interim Financial Statement - 3rd quarter 2007 7 November 2007
Annual Financial Statements and 4th quarter 2007 12 February 2008
AGM Marel hf
7 March 2008
For further information, contact:
Hörður Arnarson, CEO Phone: 563-8000
