Marel — Investor Presentation 2015

Mar 4, 2015

2. CEO's Operational Report

Amarel
Innovation Through Partnership

Arni Oddur Thordarson, CEO

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Cmarel
Innovation Through Partnership

At the customer, for the customer while refocusing

• Revenue €713 million compared to €662 million in 2013
• 7.7% revenue growth
• Order book starts the year at €175 million compared to €132 million in 2014
• Good geographical mix in order intake
• Adjusted EBIT of €48.8 million or 6.8%
• Net result of €11.7 million and free cash flow of €75.5 million

* Refocusing costs in 2014 amount to €19.6 million

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Cmarel
Innovation Through Partnership

Order book at a good level at the start of 2015

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Cmarel
Innovation Through Partnership

Operational results improving with strong cash flow

• Revenue growth of 7.7% from last year
• Full year adjusted EBIT of EUR 48.8 million (6.8%)
• Management guidance for 2014 was organic growth with adjusted EBIT of EUR 40-50 million
• Order book at end of year is EUR 175 million compared to EUR 132 million at beginning of year

EBITDA improvement and strong cash flow has driven Net Debt/adj. EBITDA down to 2.08

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marel
Innovation Through Partnership*

Business Results

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marel Innovation Through Partnership

Business results

EUR thousands	Full year 2014		Full year 2013
Revenue	712,554		661,536
Gross profit before refocusing cost	255,797	35.9%	233,644	35.3%
Before refocusing costs
Result from operations (adjusted EBIT)	48,778	6.8%	42,909	6.5%
Adjusted EBITDA	83,666	11.7%	14,086	10.5%
After refocusing costs
Result from operations (EBIT)	29,178	4.1%
EBITDA	66,698	9.4%
Net result	11,731		22,620
Orders received (including service revenues)	754,996		668,584
Order book	174,880		132,438

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iMareI Innovation Through Partnership*

Development of business results

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marel
Innovation Through Partnership

Marel enters 2015 with Order Book of EUR 175 million

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iimarel
Innovation Through Partnership

Condensed consolidated balance sheet

ASSETS

EUR thousands

Non-current assets

Property, plant and equipment ... 96,139 104,707
Goodwill ... 387,103 378,708
Other intangible assets ... 114,916 118,561
Receivables ... 94 691
Deferred income tax assets ... 7,873 9,611
... 606,125 612,278

Current assets

Inventories ... 88,450 91,796
Production contracts ... 29,123 24,829
Trade receivables ... 77,125 68,737
Assets held for sale ... 2,500 -
Other receivables and prepayments ... 23,551 22,135
Cash and cash equivalents ... 24,566 19,793
... 245,315 227,290

Total assets
851,440 839,568

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iMarel
Innovation Through Partnership

Condensed consolidated balance sheet (continued)

LIABILITIES AND EQUITY	31/12 2014	31/12 2013
EUR thousands
Equity	427,498	419,339
LIABILITIES
Non-current liabilities
Borrowings	180,278	214,846
Deferred income tax liabilities	11,308	13,885
Provisions	7,292	6,065
Derivative financial instruments	5,399	7,184
	204,277	241,980
Current liabilities
Production contracts	64,958	44,881
Trade and other payables	122,479	105,662
Current income tax liabilities	4,185	3,526
Borrowings	18,635	22,077
Provisions	9,408	2,103
	219,665	178,249
Total liabilities	423,942	420,229
Total equity and liabilities	851,440	839,568

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iMareI Innovation Through Partnership

2014 cash flow composition and changes in net debt

Operating activities (before interest & tax)	Tax	Investment activities	Free cash flow
102.2 million	4.0 million	22.7 million	75.5 million

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iMareI Innovation Through Partnership

2014 cash flow composition and changes in net debt

Operating activities (before interest & tax)	Tax	4.0 million	Invest-ment activities	22.7 million	Free cash flow	75.5 million	Net finance cost	12.6 million	Treasury shares	5.6 million	Business combinations*	5.7 million	Other items**	8.8 million	Changes in net debt

• After sales network in Denmark and Sweden
  ** Currency effect and change in capitalized finance charges

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iMareI Innovation Through Partnership

Net interest bearing debt reduced by EUR 42.8 million in 2014

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marel
Innovation Through Partnership

Capital structure in line with targets

• Net debt / EBITDA ratio target of 2-3 x EBITDA
• Board of Directors proposes to pay out 30% of net profit of 2014 as dividend in line with dividend policy of 20-40%
• Marel is stimulating further revenue and operational profit growth by:
• Streamlining the business
• Continuous innovation
• Investing in the business

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marel
Innovation Through Partnership

Refocusing on track

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Simpler, Smarter, Faster

marel Innovation Through Partnership

Refocus the product portfolio. Leverage our strengths and focus on our unique solutions

Optimize manufacturing footprint to balance utilization of resources within the company

Continuous focus on innovation and investments to advance the business to drive future value creation

Serve customer needs better

Reduced "time to market" for innovative solutions

Penetrate market faster after product launches

Increase operational efficiency with a target of EBIT in excess of €100 million in 2017

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imarel
Innovation Through Partnership

Simpler, Smarter, Faster Organizational Structure

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imarel
Innovation Through Partnership

Refocusing well on track

At the customer, for the customer

• Record order intake and revenue in the second half of 2014 ☑

Simpler, Smarter, Faster Marel

• Streamlining in sales, service, and innovation →

Actions taken to optimize manufacturing in 2014

• Salmon activities transferred from Norresundby to Stovring ☑
• Meat activities transferred from Oss to Boxmeer ☑
• Ceasing of manufacturing of freezers in Singapore, to be completed by mid year ☑

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Cmarel
Innovation Through Partnership

Actions taken to optimize manufacturing in 2015

Streamlining of U.S. operations

• Manufacturing in Des Moines to be merged to an existing facility in Gainesville
• Investment in a new innovation center in Des Moines

Streamlining of U.K. operations

• Divestment of High-speed slicing operations in Norwich
• The acquirer is the Middleby corporation and the closing of the transaction is expected before the end of Q1 2015
• Marel will retain the frozen portioning and robotics product families, which remain of strategic importance

Divestment of non-core business

• Stork Inter Ibérica focusing on the local dairy business in Spain, sold to Keravalon, a private investment group

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Simpler, Smarter, Faster: 2014-2015

Product portfolio optimized

At the customer, for the customer

Full potential

Marel is stimulating further revenue growth and solid operational improvements:

• Streamlining the business
• Continuous innovation
• Investing in the business

Manufacturing footprint optimized

2014	2015	2016	2017
Revenue growth 7.7%
Adj. EBIT 48.8 m
Free cash flow 75.5m	Organic growth
Solid operational improvement
Good cash conversion	Organic growth
Solid operational improvement
Good cash conversion	Organic growth
> 100 million EBIT
Good cash conversion

Total estimated cash-out cost of refocusing €25 million

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Quality of Earnings

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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

Greenfields

• Several large Greenfield projects in Poultry, Fish, and Further Processing

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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iMareI Innovation Through Partnership

Business overview

Other segments such as vegetable and cheese account for 2% of revenue

Poultry

Volume and profitability improved throughout the year

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

53% of revenue
12.0% adj. EBIT

Fish

Very good year for Marel's Salmon segment and operation moved to modern facility in Stovring

Investments in the Whitefish segment are picking up

16% of revenue
5.7% adj. EBIT

Meat

Reference projects established around the globe

Operation streamlined and manufacturing in Oss consolidated with Boxmeer to capture synergies

17% of revenue
-2.1% adj. EBIT

Further Processing

The year started slow but order intake at good level in second half of year

Operation streamlined in Q4 2014 and Q1 2015, manufacturing in US consolidated

13% of revenue
-0.2% adj. EBIT

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imarel
Innovation Through Partnership

Large projects around the globe in 2014

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iMareI Innovation Through Partnership

Thank you
Takk fyrir
Dank u wel
Mange tak

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Disclaimer

marel
Innovation Through Partnership

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