EXECUTIVE SUMMARY
Financial highlights Q1 2021
- Strong orders received and pipeline is growing
- Margins impacted by logistics and mobility challenges as the pandemic escalated
- Profitability hampered by step up in sales and service coverage and strategic improvement initiatives
- Orders received were
EUR 369.4m (1Q20: 351.8m). - The order book1 was
EUR 455.3m (4Q20: 415.7m, 1Q20: 464.6m). - Revenues were
EUR 334.0m (1Q20: 301.6m). - EBIT2 was
EUR 38.0m (1Q20: 25.4m), translating to an EBIT1 margin of 11.4% (1Q20: 8.4%). - Net result was
EUR 21.2m (1Q20: 13.4m). - Basic earnings per share (EPS) were
EUR 2 .82 cents (1Q20:1.76 cents ). - Cash flow from operating activities before interest and tax was
EUR 60.2m (1Q20: 61.5m). - Free cash flow at
EUR 45.5m (1Q20: 38.6m) - Net debt/EBITDA was 0.8x at the end of March (4Q20: 1.0x, 1Q20: 0.4x). Targeted capital structure is 2-3x net debt/EBITDA.
Corporate highlights Q1 2021
- Curio was consolidated into Marel’s financial results as of
4 Jan 2021 . - Acquisition of Dutch duck processing solutions provider Poultry Machinery Joosten (PMJ) announced on
21 Jan 2021 , and acquisition of a 40% stake in Stranda Prolog, a Norwegian provider of salmon processing solutions, announced on29 Jan 2021 . - The 2020 virtual AGM on 17 Mar approved all proposals and the Board was re-elected with
Arnar Thor Masson as the new chairman.
Árni Oddur Thórdarson, CEO
“We start the year on a strong note with orders received of
We are stepping up investments in local sales and service coverage around the world, and continue to innovate and introduce new revolutionary solutions focused on the consumer-ready market. Orders received for standard equipment and aftermarket were strong in the quarter. Conversion from pipeline for large greenfield projects was at a record level in the meat segment where we secured landmark orders, albeit softer in the poultry and fish segment in the quarter. The pipeline continues to grow in all industry segments and we are targeting strong orders received in the coming quarters. Automation and digital solutions in the food value chain continue to be key drivers for our industry, and Marel is well positioned to support the food industry to prepare for shifting market dynamics and change in consumer behavior.
In
Operational profit was 11.4% on a revenue base of
Cash flow was robust and leverage was 0.8x net debt/EBITDA at the end of March. We continued to strengthen our full-line offering with acquisitions focused on the fish and duck markets in the quarter. In times of such transformation on top of economic uncertainties, there will be fluctuations quarter-by-quarter. At Marel, we remain fully committed to our ambitious mid-, and long-term targets with continued growth and value creation.”
Financial performance
Strong orders received in the quarter
Orders received in the quarter were
Across all industries, orders received were strong for standard equipment and aftermarket. Marel has stepped up market coverage and recently launched revolutionary solutions in consumer-ready products.
The need for automation and digital solutions in the food value chain is driven by secular trends like population growth and urbanization. COVID-19 has been an accelerator for these trends in terms of social distancing, access to labor and hygiene. In addition, shifting market dynamics and change in consumer behavior are also driving demand.
The book-to-bill ratio in the quarter was 1.11, compared to an average of 1.00 in the past 4 quarters (1Q20-4Q20).
A healthy order book with landmark orders from
The order book at end of March was
Another landmark project for
Greenfields, such as large equipment orders, and projects with longer lead times constitute the vast majority of the order book while services, spares and standard equipment have shorter lead times and run faster through the order book.
Revenues of
Revenues were
Aftermarket represented 39% of total revenues in the quarter (4Q20: 38%, 1Q20: 41%). Robust spare parts revenues compensated for lower service revenues due to travel restrictions and logistical challenges.
Revenues from consolidation of Curio (as of
Profitability hampered by rising logistics costs, step up in sales and service coverage and strategic improvement initiatives
COVID-19 had an impact on 1Q21 results. As the pandemic escalated in Jan-Feb, stringent lockdowns across several key geographies had an impact on the efficiency of operations. Ensuring timely delivery and installation for customers during a period of significant challenges in mobility and logistics, led to higher costs in manufacturing, aftermarket and transportation.
Gross profit margin was 37.2% in the quarter (1Q20: 35.6%) and gross profit was
Sales and marketing (S&M) costs were at a level of 12.0% of revenues and reflect the step up in market coverage, and innovation cost was at 6.2% in line with plans to leverage global reach and digital solutions.
General administrative (G&A) costs were high or 7.7% of revenues, rising temporarily due to several improvement projects to increase resilience and agility of operations. These are important initiatives to better service our customers and prepare for the organic growth ahead in line with a growing pipeline. Marel does not adjust results for non-recurring costs.
EBIT1 was
Net results was
EPS was
Robust cash flow generation to support continued investments
Both operational and free cash flow was robust in the quarter.
Cash generated from operating activities in the quarter was
Free cash flow in 1Q21 was
Strong cash conversion supports continued investments in innovation, infrastructure and strategic moves.
Investments to support organic and strategic growth
To best serve customer needs and capture growth opportunities from changing market dynamics, Marel is focusing on increasing digitalization and agility, leading to an increased level of investments in the coming years.
Important initiatives identified, e.g. stepping up market coverage, innovation investments in digital solutions, and improvement projects to streamline the back end, as well as automating and digitizing the manufacturing platform, supply chain and aftermarket.
In 2021, Marel will open sales and service offices, as well as new demo centers in both Shanghai,
Leverage ratio of 0.8x and strong financial position to support 2017-2026 growth strategy
Low leverage, committed liquidity of EUR 668.4m at the end of March, including fully committed all-senior funding in place until 2025, enables continued investment and will facilitate future strategic moves in the ongoing industry consolidation wave, in line with the company’s 2017-2026 growth strategy.
Leverage was 0.8x at the end of 1Q21, compared to 1.0x at the end of 4Q20 following the TREIF acquisition closing in
For acquisitions of Curio and PMJ, in addition to the 40% holding in Stranda Prolog,
Dividend paid out in April corresponding to
Resilient business model in a quarter of lockdown and logistics challenges
The full economic impact of COVID-19 on Marel is uncertain.
Significant investments in recent years in Marel’s global reach, digital platform and infrastructure, have been instrumental in positioning the company to successfully navigate a business environment colored by the pandemic, geopolitical uncertainty, trade constraints and rapidly changing market dynamics and shifts in consumer behavior.
Marel is a critical infrastructure company in the food industry. All manufacturing sites have remained open throughout the pandemic. In early 2020, Marel’s manufacturing sites in close cooperation with our suppliers, diligently organized themselves to ensure business continuity and safety for both employees and customers.
Marel’s effort in recent years, to shorten production lead times and co-locate production, created more resilience in the supply chain. This together with the strategic inventory build-up allowed more agility in terms of serving customers’ needs better and keeping the food value chain running.
Marel provides virtual and remote support from our global platform to our local teams to engage and connect with our customers.
The 2021 virtual AGM approved all proposals and new board elected
After serving on the
Dr
Remuneration policy was approved with ESG added as a parameter for the Executive Team total remuneration.
Industry performance Q1 2021
Marel Poultry - 48% of total revenues with 16.2% EBIT1 margin
Full-line offering with one of the largest installed bases world-wide, focusing on roll-out of innovative products and market penetration through cross-selling of secondary and further processing solutions.
M&A: Following the acquisition of PMJ, Marel will expand its third pillar within poultry processing and become the industry’s only full-line provider of duck processing solutions for this large and growing market, where 70% of demand comes from
Orders received for Marel Poultry in 1Q21 were strong in standard equipment and aftermarket, while orders for larger projects were soft. Pipeline is building up in all processing steps, although timing of conversion into firm orders is uncertain.
Revenues in 1Q21 for Marel Poultry were
EBIT in 1Q21 was
Full-line offering with focus on strong product development, increased standardization, modularization and market penetration and further cross- and upselling.
M&A: The TREIF acquisition doubled standard equipment sales for
Newly launched solutions, SensorX Magna and
Orders received in 1Q21 for
Revenues in 1Q21 for
EBIT in 1Q21 was
Management continues to target medium and long-term EBIT margin expansion for
Marel Fish - 12% of total revenues with 5.3% EBIT1 margin
Objective to reach full-line offering across farmed and wild whitefish and salmon through continued focus on innovation and M&A.
M&A: Curio consolidated as of
Innovation roadmap accelerated to close certain application gaps to reach full-line offering for both salmon, as well as wild and farmed whitefish.
Orders received in 1Q21 were soft for large projects. Pipeline for large projects is building up and conversion into orders is expected to pick up.
Revenues for
EBIT in 1Q21 was
Management continues to target medium and long-term EBIT margin expansion for
Outlook
Market conditions have been challenging due to geopolitical uncertainty and the ongoing COVID-19 pandemic. Marel enjoys a balanced exposure to global economies and local markets through its global reach, innovative product portfolio and diversified business mix. At the moment it is not known what the full economic impact of COVID-19 will be on Marel in 2021.
Marel is committed to achieve its mid- and long-term growth targets. Our strategic mid-term targets are to achieve gross profit around 40%, SG&A of around 18% and Innovation at the 6% strategic level by year-end 2023.
In the period 2017-2026, Marel is targeting 12% average annual revenue growth through market penetration and innovation, complemented by strategic partnerships and acquisitions.
- Marel’s management expects 4-6% average annual market growth in the long term. Marel aims to grow organically faster than the market, driven by innovation and growing market penetration.
- Maintaining solid operational performance and strong cash flow is expected to support 5-7% revenues growth on average by acquisition.
- Marel’s management expects basic EPS to grow faster than revenues.
Growth is not expected to be linear but based on opportunities and economic fluctuations. Operational results may vary from quarter to quarter due to general economic developments, fluctuations in orders received and timing of deliveries of larger systems.
1 Including acquired order book of Curio and PMJ of
Virtual investor meeting and live webcast/conference call 29 April 2021
On Thursday
The virtual meeting will be webcast live on marel.com/webcast and a recording will be available after the meeting on marel.com/ir.
Members of the investment community can join the conference call at:
IS : +354 800 7520NL : +31 20 721 9496UK : +44 33 3300 9268- US: +1 833 526 8398
Upcoming virtual investor events
- Kepler Cheuvreux European SMID Mega Trends Days, 10 May
- Citi’s 10th Annual Virtual Frontier Markets Symposium, 17 May
Berenberg Conference USA 2021, 20 May- ABN AMRO –
ODDO Benelux Equities Conference , 26 May - HSBC Frontier Markets Roadshow, 4 June
JP Morgan European Capital Goods CEO Conference, 11 June
Upcoming events
- Poultry
IMPAQT software – virtual 26 May North Atlantic Seafood Forum , digitalization – virtual 8-10 Jun- Intralogistics – virtual Jun
- Let’s Fish, whitefish including Curio – virtual May
- Fish Forum Russia, 6-8 Jul
- FoodPro Australia – 27-28 Jul
Financial Calendar
Marel will publish its (Condensed) Consolidated Financial Statements according to the below financial calendar:
- Q2 –
21 July 2021 - Q3 –
20 October 2021 - Q4 –
2 February 2022
Financial results will be disclosed and published after market closing of both NASDAQ Iceland and Euronext Amsterdam.
Investor Relations
For further information, please contact Marel Investor Relations via email IR@marel.com or tel. (+354) 563 8001.
Media relations
For media inquiries, please contact Marel Media Relations via email globalcommunications@marel.com or tel. (+354) 563 8200.
About Marel
Marel (NASDAQ: MAREL; AEX: MAREL) is a leading global provider of advanced food processing equipment, systems, software and services to the poultry, meat and fish industries. Marel has around 6,800 employees in over 30 countries. In 2020, Marel delivered
Forward-looking statements
Statements in this press release that are not based on historical facts are forward-looking statements. Although such statements are based on management’s current estimates and expectations, forward-looking statements are inherently uncertain. We therefore caution the reader that there are a variety of factors that could cause business conditions and results to differ materially from what is contained in our forward-looking statements, and that we do not undertake to update any forward-looking statements. All forward-looking statements are qualified in their entirety by this cautionary statement.
Market share data
Statements regarding market share, including those regarding Marel’s competitive position, are based on outside sources such as research institutes, industry and dealer panels in combination with management estimates. Where information is not yet available to Marel, those statements may also be based on estimates and projections prepared by outside sources or management. Rankings are based on sales unless otherwise stated.
Attachments
- Marel Q1 2021 Condensed Consolidated Interim Financial Statements
- Marel Q1 2021 Condensed Consolidated Interim Financial Statements
- Marel Q1 2021 Press Release_vF
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