Marel — Investor Presentation 2015

Oct 29, 2015

Q3 2015 Presentation

October 29, 2015

iMareI

Innovation Through Partnership®

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iMareI Innovation Through Partnership

Arni Oddur Thordarson, CEO

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imarel Innovation Through Partnership

Strong order intake and robust operational performance

• Revenue of €189 million [Q3 2014: 188m]
• Good geographical and product mix
• Order intake of €211 million [Q3 2014: 200m]
• Adj. EBIT €24.2 million or 12.8% [Q3 2014: 9.3%]
• Adj. EBITDA €31.6 million or 16.7% [Q3 2014: 13.8%]
• Net result €14.7 million [Q3 2014: 9.8m]
• Earnings per share 2.07 eurocents [Q3 2014: 1.34]

* Refocusing costs in Q3 2015 amount to €2.0 million

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imarel
Innovation Through Partnership

Order book at a good level

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imarel
Innovation Through Partnership

Solid operational performance with strong cash flow

• Adj. EBIT €24.2 million or 12.8% [Q3 2014: 9.3%]
• Marel has streamlined its operations and focused its product portfolio
• Discontinued low margin business accounts for 30 million annually and is not included in the accounts since Q2 2015
• Marel has optimized its manufacturing footprint leading to improved margins
• Year to date revenue is €617 million and adj. EBIT is €78 million (12.6%) compared with €513 million and €33 million (6.4%) respectively during same period last year
• Order book has good product and geographical mix and now stands at €188 million compared with €169 million in Q3 2014

EBITDA improvement and strong cash flow has driven Net Debt/adj. EBITDA down to 1.1

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imarel Innovation Through Partnership

Business overview for the first nine months of 2015

Other segments such as vegetable and cheese account for 1% of revenue

Poultry

Very strong first nine months of the year with good volume and profitability

Good mix of greenfields, modernization, and maintenance business around the globe

55% of revenue
17.8% adj. EBIT

Fish

Good first nine months of the year for Marel's fish segment

Conditions in salmon and white fish segments remain favorable

FleXicut continues to impress customers and good sales were seen in salmon filleting machines in the third quarter

17% of revenue
9.3% adj. EBIT

Meat

Good improvement in profitability compared to previous years

Good activity in third quarter with landmark orders from Mexico and China

Product mix will lead to lower profitability in Q4 than YTD

15% of revenue
9.2% adj. EBIT

Further Processing

Streamlining of activities continued with the ongoing transfer of activities from Des Moines to Gainesville

Further streamlining and investments planned to strengthen Marel's position in the convenience food market

12% of revenue
-2.6% adj. EBIT

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imarel
Innovation Through Partnership

Linda Jonsdottir, CFO

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Business results

marel Innovation Through Partnership

EUR thousands	Q3 2015	Q3 2014	Change in %
Revenue	189,106	187,931	0.6
Gross profit before refocusing cost	73,923	67,372	9.7
as a % of revenue	39.1	35.8
Before refocusing costs
Result from operations (adjusted EBIT)	24,166	17,409	38.8
as a % of revenue	12.8	9.3
Adjusted EBITDA	31,636	25,912	22.1
as a % of revenue	16.7	13.8
After refocusing costs
Result from operations (EBIT)	22,206	16,113	37.8
as a % of revenue	11.7	8.6
EBITDA	29,686	24,616	20.6
as a % of revenue	15.7	13.1
Net result	14,698	9,841	49.3
Orders received (including service revenues)	210,940	200,747	5.1
Order book	187,722	169,242	10.9

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imarel

Firm steps taken to improve profitability

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imarel
Innovation Through Partnership

Order book grew by EUR 22 million between quarters

Order book at the end of Q3 reflects continued operations and refocused product portfolio

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imarel
Innovation Through Partnership

Condensed consolidated balance sheet

ASSETS (EUR thousands)

	30/9 2015	31/12 2014
Non-current assets
Property, plant and equipment	85,155	96,139
Goodwill	388,811	387,103
Other intangible assets	105,708	114,916
Receivables	441	94
Deferred income tax assets	9,965	7,873
	590,080	606,125
Current assets
Inventories	96,210	88,450
Production contracts	30,390	29,123
Trade receivables	78,020	77,125
Assets held for sale	4,899	2,500
Other receivables and prepayments	25,928	23,551
Cash and cash equivalents	92,119	24,566
	327,566	245,315
Total assets	917,646	851,440

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iimarel Innovation Through Partnership

Condensed consolidated balance sheet (continued)

LIABILITIES AND EQUITY (EUR thousands)	30/9 2015	31/12 2014
Equity	434,339	427,498
LIABILITIES
Non-current liabilities
Borrowings	223,951	180,278
Deferred income tax liabilities	15,499	11,308
Provisions	11,282	7,292
Derivative financial instruments	4,346	5,399
	255,078	204,277
Current liabilities
Production contracts	73,673	64,958
Trade and other payables	120,615	122,479
Current income tax liabilities	6,365	4,185
Borrowings	18,462	18,635
Provisions	9,114	9,408
	228,229	219,665
Total liabilities	483,307	423,942
Total equity and liabilities	917,646	851,440

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imarel
Innovation Through Partnership

Q3 2015 cash flow composition and change in net debt

Operating activities (before interest & tax)	Tax	Invest-ment activities	Free cash flow	Net finance cost	Purchase of Treasury shares	Other items*	Decrease in net debt
	1.5 million
29.7 million		4.9 million	23.3 million	2.9 million	13.8 million	0.9 million	5.7 million

• Tax on dividend, currency effect and change in capitalized finance charges

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Anatel Innovation Through Partnership

Ample room for stimulating further growth

• Net debt /adj.EBITDA is 1.12 x EBITDA compared with target of 2-3 x EBITDA
• Marel is stimulating further revenue and operational profit growth by:
• Streamlining the business
• Continuous innovation
• Investing in the business
• In Q3 Marel acquired 10 million treasury shares for the total amount of €13.8 million. In Q2 Marel acquired 15 million treasury shares for €18.2 million.
• Marel holds 31.7 million treasury shares, whereof 6.7 million are hedged towards outstanding stock options and 25 million were acquired to use in relations with future acquisitions

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iMareI Innovation Through Partnership

Arni Oddur Thordarson, CEO

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Good mix of Greenfields, Modernization and Maintenance

marel Innovation Through Partnership

Modernization and standard equipment

• Investment in expansion and modernization projects picking up, especially in the Americas and in Europe

Greenfields

• Small and medium-sized greenfield projects in all segments and large-scale projects in poultry, meat and further processing in Q3 2015

Maintenance

• Marel has the largest installment base in its industry
• Recurring service and spare parts revenues increasing steadily and are currently around 40% of total revenues

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imarel
Innovation Through Partnership

Strategic acquisitions and strong organic growth

• Marel shares were listed at the Icelandic Stock Exchange in 1992 with revenue of €6 million and 45 employees – focus on the fish industry
• Marel is currently a global leader in providing advanced equipment for the poultry, meat and fish industry with 4,000 employees operating in 32 countries
• Organic revenue growth has been 6% per year post Stork Food System acquisition in 2008 and earnings per share have grown 20% per year

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Simpler, Smarter, Faster: 2014-2015
Full potential

Product portfolio optimized

At the customer, for the customer

Manufacturing footprint optimized

2014

Revenue growth 7.7%

Adj. EBIT €48.8 m

Free cash flow €75.5m

Cash-out cost to date €14 million compared to estimated total cash-out cost of below €25 million throughout the program

2015 year-to-date

Revenue €617m

Adj. EBIT €77.7m

Free cash flow €70.6m

2016

Organic growth

Solid operational improvement

Good cash conversion

2017

Organic growth

> €100 million EBIT

Good cash conversion

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Cmarel Innovation Through Partnership

Thank you
Takk fyrir
Dank u wel
Mange tak

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Disclaimer

marel
Innovation Through Partnership

This Presentation is being furnished for the sole purpose of assisting the recipient in deciding whether to proceed with further analysis of this potential opportunity. This Presentation is for informational purposes only and shall not be construed as an offer or solicitation for the subscription or purchase or sale of any securities, or as an invitation, inducement or intermediation for the sale, subscription or purchase of securities.

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