- Revenue for Q1 2015 totaled 209.3m [Q1 2014: 154.8m].
- Adjusted EBITDA* for Q1 2015 was 36.9m or 17.6% of revenue [Q1 2014: 11.6m]. EBITDA was 29.4m or 14.0% of revenue [Q1 2014: 8.1m].
- Adjusted operating profit* (adj.EBIT) for Q1 2015 was 23.8m or 11.4% of revenue [Q1 2014: 4.6m]. EBIT was 16.2m or 7.8% of revenue [Q1 2014: 1.0m].
- Net result for Q1 2015 was 12.6m [Q1 2014: Loss of 1.9m]. Earnings per share was 1.73 euro cents compared with a loss of 0.25 euro cents in Q1 2014.
- Cash flow from operating activities before interest and tax was 39.5m [Q1 2014: 19.4m]. Net interest bearing debt was 161.7m [Q1 2015: 208.4m].
- The order book was at 178.0m at the end of the quarter compared with 174.9m at the end of Q4 2014.
The year 2015 starts well for Marel. The company showed significant increase in operational and net profit from previous quarters fuelled by record revenues and order intake as well as operational improvements derived from a simplified and streamlined organization. The strong financial position with net debt/EBITDA at 1.48 enables Marel to further stimulate growth and strengthen its competitive position. There is a general tailwind in Marel’s main markets in addition to favorable conditions in the financial markets.
Two subsequent events have taken place between the end of Q1 and the publishing date of the Q1 results;
• The sale of the High Speed Slicing operations in Norwich, U.K., which was agreed in February 2015, was closed in April with a slightly positive P/L effect and total estimated cash proceeds of 9.5 million.
• The real estate in Oss, Netherlands, was sold in April delivering cash proceeds of 2.4 million. The Oss operation was previously transferred to the multi-industry center in Boxmeer to better utilize manpower and investments and as well, allow the company to be better equipped to deal with fluctuations in demand among various product groups and industries.
From the beginning of the refocusing program until the end of Q1, taking into account the proceeds from the above mentioned subsequent events, the total cash-out cost of the refocusing program stands at 12 million with an 27 million in P/L effect.
Management guidance for 2015 is organic revenue growth, with a solid increase in operational and net profit. Full focus remains on strengthening the market approach and operational improvement with the aim to reach EBIT of over 100 million in 2017.
Arni Oddur Thordarson, CEO:
“We are pleased with the good results in the beginning of 2015. With a focused market approach and strong commercial product portfolio we managed to utilize the tailwind in Marel´s main markets resulting in record order intake, revenues and significantly improved operational results.
Our sales growth is well balanced between Greenfield projects, extension and modernization projects and growth in our maintenance business. We have invested well in innovation and we have been introducing steady flow of new and exciting solutions to enable poultry, fish and meat processors to further optimize yield and throughput as well as minimizing waste and reducing usage of water and energy, making the value chain more sustainable.
All industries are showing improved operational results. I want to express my thanks to our employees for their efforts and commitment. At the same time we are refocusing and streamlining the operation we have managed to strengthen our partnership with existing customers and attract new customers. The goal is always the same, to deliver increased value to customers and shareholders.”
Authorization to purchase own shares
Board of Directors of Marel has granted management an authorization to purchase up to 25 million own shares on the behalf of the company in one or more transactions in the period that is remaining of the calendar year 2015. The shares are to be used as payment for potential future acquisitions that needs full approval of the Board of Directors.
Simpler, Smarter, Faster refocusing program
The Simpler, Smarter, Faster two year refocusing program is on track. The program focuses on simplifying the market approach to better serve the customer needs and to streamline operations to increase quality and efficiency in the company while lowering the recurring cost base. There is special focus on innovation and manufacturing optimization.
The innovation and manufacturing optimization is well on track. In Q1 Marel announced the streamlining of its operations in Singapore, Denmark, the U.S. and the U.K. as well as the divestment of a non-core business in Spain. The sale of Stork Inter Ibérica in Spain was concluded during the quarter. The closing of the sale of the High Speed Slicing operations in the U.K. took place in April, though the deal was signed during Q1.
From the beginning of the refocusing program until the end of Q1, taking into account the proceeds from subsequent events, the total cash-out cost of the refocusing program is at 12 million with 27 million in P/L effect for the same period. Total estimated cash-out costs related to refocusing actions is 25 million over the whole refocusing period while the total P/L effect cannot be fully estimated at this time.
Refocusing actions taken during Q1 2015:
- Ceasing of manufacturing of freezers in Singapore. Marel is entering into partnerships with Heinen and VDL to continue to provide freezing solutions to its customers. The aim is to support Marel’s full line offerings in fish, meat and poultry processing.
- Streamlining of U.S. operations. The manufacturing operation in Des Moines will merge with an existing facility in Gainesville. At the same time, a new innovation center will be established in Des Moines. The transition process will be completed before year-end 2015.
- Streamlining of operations in Denmark. All activities in Bornholm, Denmark will be transferred to existing facilities in Aarhus and Nitra. The transition process will be completed before year-end 2015.
- Divestment of non-core palletizing business in Spain. Stork Inter Ibérica was sold to a private investment group.
- Streamlining of U.K. operations. High Speed Slicing operations in Norwich, U.K. were sold to the Middleby Corporation. Marel will retain the frozen portioning and robotics families, which remain of strategic importance.
- The discontinued operations mentioned above in Singapore, Spain and the U.K. represented close to 30 million in revenues in 2014 with low gross margins and negative EBIT. Revenues in Q1 from discontinued operations were 6 million and the order book of discontinued operations was 4 million at the end of Q1.
Outlook
Management guidance for 2015 is organic revenue growth, with a solid increase in operational and net profit. Full focus remains on strengthening the market approach and operational improvement with the aim to reach EBIT of over 100 million in 2017.
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. The long-term outlook in the industry remains favorable and the estimated annual market growth for providing advanced solutions and equipment for meat, poultry and fish processing is 4-6%. Marel’s goal is to continue to grow faster than the market, based on its innovative customer solutions and extensive sales and service network.
Results may vary from quarter to quarter due to general economic developments, fluctuations in orders received, and deliveries of larger systems.
