Marel Q1 2021: Scaling up ahead of the growth curve
Financial highlights Q1
- Strong orders received and
pipeline is growing
- Margins impacted by
logistics and mobility challenges as the pandemic
- Profitability hampered by
step up in sales and service coverage and strategic improvement
- Orders received were EUR 369.4m
- The order book1 was EUR 455.3m
(4Q20: 415.7m, 1Q20: 464.6m).
- Revenues were EUR 334.0m (1Q20:
- EBIT2 was EUR 38.0m (1Q20:
25.4m), translating to an EBIT1 margin of 11.4% (1Q20:
- Net result was EUR 21.2m (1Q20:
- 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:
- 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
- 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 on 29 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.
“We start the year on a strong note with orders
received of EUR 369 million, compared to the previous record orders
of EUR 352 million in 1Q 2020. The dynamics this year are
different. While 2020 started strong and slowed down from March
onwards, 2021 started slow but really took off in March and the
outlook is positive.
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 China we secured a large greenfield project
with Muyuan Group, the world’s second largest pig breeder, that is
vertically integrating its operations to encompass feed mills,
farming and processing facilities. The project consists of several
lines replicated across multiple locations to ensure a harmonized
way of working and seamless flow of high quality pork products. We
are also working with the large and forward-thinking customer
Frimesa on a pork processing plant in Brazil, which will be the
largest and most advanced in Latin America.
Operational profit was 11.4% on a revenue base
of EUR 334 million in the quarter. Challenges in terms of logistics
and mobility in the quarter were at a greater magnitude than
before. Ensuring timely delivery and installation did lead to
higher costs in manufacturing, aftermarket and transportation,
impacting gross profit. Sales and administrative cost was also at
higher levels than in past quarters. We are stepping up market
coverage and taking on important initiatives to automate and
digitize our manufacturing platform, supply chain and aftermarket
business to create more agility and flexibility in our operations
ahead of the anticipated growth curve. I am encouraged and proud to
see how our passionate team managed to engage with our customers
and deliver sales, installation and services in a very challenging
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
Strong orders received in the quarter
Orders received in the quarter were EUR 369.4m,
up 15.5% QoQ and 5.0% YoY. Orders received in the first quarter
include orders from the newly acquired entities of TREIF (meat and
other), Curio (fish) and PMJ (poultry).
Across all industries, orders received were
strong for standard equipment and aftermarket. Marel has stepped up
market coverage and recently launched revolutionary solutions in
Marel Meat secured several landmark orders in
the quarter, while conversion from pipeline of large orders was
soft for Marel Poultry and Marel Fish. The pipeline for large
greenfields and modernization projects is building up in all
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
A healthy order book with landmark
orders from China and Brazil
The order book at end of March was EUR 455.3m
(4Q20: 415.7m, 1Q20: 464.6m), representing 36% of 12-month trailing
Marel Meat secured a landmark order from Muyuan
Group, the world’s second-largest pig breeder. Muyuan is building
sophisticated processing facilities in China, close to the pig
farms to help control and eliminate ASF and other animal diseases.
Muyuan is adopting Marel’s most advanced primary meat processing
lines to take best advantage of industry-leading electronic and
Another landmark project for Marel Meat is the
Frimesa pork processing plant in Brazil, which will be the largest
and the most advanced in Latin America.
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 EUR 334m with 39% solid
recurring aftermarket revenues
Revenues were EUR 334.0m in 1Q21, up by 10.7%
YoY, and down 2.7% QoQ.
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 4
Jan 2021) and acquisition of PMJ (as of 21 Jan 2021), were around
EUR 3m in 1Q21. The 40% stake in Stranda Prolog is categorized as
investment in associates.
Profitability hampered by rising
logistics costs, step up in sales
and service coverage and strategic improvement
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 EUR 124.4m (1Q20: 107.3m),
positively impacted by mix but volume and margin were negatively
impacted by mobility and logistics challenges.
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
EBIT1 was EUR 38.0m (4Q20: 52.3m, 1Q20: 25.4m),
translating to an EBIT1 margin of 11.4% (4Q20: 15.2%, 1Q20:
Net results was EUR 21.2m in the quarter (4Q20:
29.1m, 1Q20: 13.4m).
EPS was EUR 2.82 cents (4Q20: 3.87 cents, 1Q20:
Robust cash flow generation to support
Both operational and free cash flow was robust
in the quarter.
Cash generated from operating activities in the
quarter was EUR 60.2m (1Q20: 61.5m).
Free cash flow in 1Q21 was EUR 45.5m (1Q20:
Strong cash conversion supports continued
investments in innovation, infrastructure and strategic moves.
Investments to support organic and
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
In 2021, Marel will open sales and service
offices, as well as new demo centers in both Shanghai, China
and Campinas, Brazil.
Leverage ratio of 0.8x and strong
financial position to support 2017-2026 growth
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 October 2020, and well below the targeted capital structure
For acquisitions of Curio and PMJ, in addition
to the 40% holding in Stranda Prolog, EUR 21.7m was paid out during
Dividend paid out in April corresponding to EUR
41.0m or 40% of net results (2020: 40%, 2019: 30%).
Resilient business model in a quarter of
lockdown and logistics challenges
The full economic impact of COVID-19 on Marel is
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
Marel provides virtual and remote support from
our global platform to our local teams to engage and connect with
The 2021 virtual AGM
approved all proposals and new board elected
Arnar Thor Masson will lead the Board as
Chairman, and Olafur Gudmundsson as the Vice-Chairman of the
After serving on the Board for 11 years, thereof
more than 7 years as Chairman, Asthildur Margret Otharsdottir did
not declare candidature. The Marel Board and management sincerely
extend their gratitude for her strategic direction and excellent
leadership throughout the years.
Dr Svafa Gronfeldt is a new director elected to
the Board. A Professor of Practice at MIT, Svafa is a founding
member of MIT’s newest innovation accelerator DesignX focused on
the design and development of technology- and service-based
ventures created at MIT, and a co-founder of the MET fund, a
Cambridge based seed investment fund. Svafa is a director of the
Board and Audit Committee of both Össur and Icelandair.
Remuneration policy was approved with ESG added
as a parameter for the Executive Team total remuneration.
Industry performance Q1
Marel Poultry - 48% of
total revenues with 16.2% EBIT1
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
Revenues in 1Q21 for Marel Poultry were EUR 159.1m,
up 5.3% YoY compared to 1Q20 which was a soft revenue quarter for
EBIT in 1Q21 was EUR 25.8m (1Q21: 18.2m) and the
EBIT margin was 16.2% (1Q21: 12.0%). EBIT was positively impacted
by product mix, while lower volume of large projects had a negative
Marel Meat - 38% of total
revenues with 7.8% EBIT1
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 Marel Meat and enhanced the full-line offering
from post-farm to dispatch of consumer-ready products.
Newly launched solutions, SensorX Magna and Accuro,
are gaining traction for focus on food safety and sustainability in
Orders received in 1Q21 for Marel Meat were strong
in both large projects and standard equipment. Landmark deals
secured in China and Brazil, as customers pursue greater automation
and channel flexibility. Pipeline remains strong.
Revenues in 1Q21 for Marel Meat were EUR 125.8m, up
by 21.4% YoY (1Q21: 103.6m).
EBIT in 1Q21 was EUR 9.8m (1Q20: 4.6m) and the EBIT
margin was 7.8% (1Q20: 4.4%). Profitability in the quarter impacted
by mix and lower than expected margins for large projects.
Management continues to target medium and long-term
EBIT margin expansion for Marel Meat, and has accelerated market
coverage and operational improvement initiatives.
Marel Fish -
12% of total revenues with 5.3%
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 4 Jan 2021.
Salmon primary processing offering solidified through the strategic
partnership with Stranda Prolog and 40% acquisition of their
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 Marel Fish in 1Q21 were EUR 39.8m,
on par YoY (1Q21: 39.4m).
EBIT in 1Q21 was EUR 2.1m (1Q20: 1.7m) and the
EBIT margin was 5.3% (1Q20: 4.3%), higher volume is needed to
deliver sufficient margin improvement.
Management continues to target medium and
long-term EBIT margin expansion for Marel Fish.
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
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
In the period 2017-2026, Marel is targeting 12%
average annual revenue growth through market penetration and
innovation, complemented by strategic partnerships and
- 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
1 Including acquired order book of Curio and PMJ
of EUR 4.2m in 1Q21. 2 Operating income adjusted for PPA
related costs, including depreciation and amortization, and as of
Q4 2020, acquisition related costs. 2
meeting and live webcast/conference call
29 April 2021
On Thursday 29 April 2021, at 8:30 am GMT (10:30 am
CET), Marel will host a virtual investor meeting where CEO Arni
Oddur Thordarson and CFO Linda Jonsdottir will give an overview of
the financial results and operational highlights in the first
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 7520
- NL: +31 20 721 9496
- UK: +44 33 3300 9268
- US: +1 833 526 8398
Upcoming virtual investor
- Kepler Cheuvreux European SMID Mega
Trends Days, 10 May
- Citi’s 10th Annual Virtual Frontier
Markets Symposium, 17 May
- Berenberg Conference USA 2021, 20
- ABN AMRO – ODDO Benelux Equities
Conference, 26 May
- HSBC Frontier Markets Roadshow, 4
- JP Morgan European Capital Goods
CEO Conference, 11 June
- Poultry IMPAQT software – virtual
- 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
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
For further information, please contact Marel
Investor Relations via email IR@marel.com or tel. (+354) 563
For media inquiries, please contact Marel Media
Relations via email email@example.com or tel. (+354)
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 EUR 1,238 million in revenues, and invests around
6% of revenues in innovation annually. By continuously transforming
food processing, Marel enables its customers to increase yield and
throughput, ensure food safety and improve sustainability in food
production. Marel was listed on NASDAQ Iceland in 1992 and
dual-listed on Euronext Amsterdam in 2019.
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.
- Marel Q1 2021 Condensed Consolidated Interim Financial
- Marel Q1 2021 Condensed Consolidated Interim Financial
- Marel Q1 2021 Press Release_vF
Grafico Azioni Marel hf (EU:MAREL)
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