Marel — Investor Presentation 2015

Feb 5, 2015

Q4 2014

Presentation

Arni Oddur Thordarson, CEO

Linda Jonsdottir, CFO

5 February 2014

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Arni Oddur

Thordarson
CEO

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Record order intake and revenue with 8% adjusted EBIT

Q4 2014 results

• Revenue €200 million compared to €168 million in Q4 2013
• Record Order intake of €206 million
• Good mix in order intake between Greenfields, Extension and Modernization Projects
• Adjusted EBIT of €16.1 million or 8%
• Strong cash flow
• The refocusing plan of becoming simpler, smarter, and faster is well on track

* Refocusing costs in Q4 amount to €7.6 million

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2014: At the customer, for the customer while refocusing

Full year results

• 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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Order book at a good level at the start of 2015

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Business overview

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

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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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Linda Jonsdottir is the new CFO of Marel

• Linda has joined Marel's Executive Team
• Will play a key role in further alignment of execution and strategy

Linda Jonsdottir

• Born in 1978, married with three children
• Been with Marel since 2009
• Linda was previously Marel's Corporate Director of Treasury and Investor Relations
• M.Sc. degree in Corporate Finance and Cand.Oecon degree in Business Administration

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Linda Jonsdottir CFO

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Business results

EUR thousands	Q4 2014	Q4 2013	Full year 2014
Revenue	200,018	168,182	712,554
Gross profit before refocusing cost	75,413	58,588	255,797
as a % of revenue	37.7	34.8	35.9
Before refocusing costs
Result from operations (adjusted EBIT)	16,058	7,410	48,778
as a % of revenue	8.0	4.4	6.8
Adjusted EBITDA	28,122	14,086	83,666
as a % of revenue	14.1	8.4	11.7
After refocusing costs
Result from operations (EBIT)	8,493	7,410	29,178
as a % of revenue	4.2	4.4	4.1
EBITDA	20,989	14,086	66,698
as a % of revenue	10.5	8.4	9.4
Net result	2,995	3,701	11,731
Orders received (including service revenues)	205,655	162,358	754,996
Order book	174,880	132,438	174,880

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Development of business results

Firm steps to improve profitability

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Marel enters 2015 with Order Book of EUR 175 million

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Condensed consolidated balance sheet

ASSETS	31/12 2014	31/12 2013
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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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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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
42.8 million |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |

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

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Net interest bearing debt reduced by EUR 42.8 million in 2014

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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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Solid global financing

• Long term financing amended and extended at the end of the year
• Took effect on January 9, 2015
• Includes an addition of a Junior facility of EUR 50 million
• Consortium of five international banks
• ABN Amro, Bayern LB, ING Bank, Landsbankinn, and Rabobank
• Increases strategic and operational flexibility

ABN·AMRO

ING BANK

Rabobank

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Arni Oddur

Thordarson
CEO

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Good mix of Greenfields, Modernization, and Maintenance

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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Large projects around the globe in 2014

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Refocusing well on track

At the customer, for the customer

• Record order intake and revenue for two consecutive quarters ☑

Simpler, Smarter, Faster Marel

• Streamlining in sales, service, and innovation →

Actions taken to optimize manufacturing

• Salmon activities transferred from Norresundby to Stovring ☑
• Meat activities transferred from Oss to Boxmeer ☑
• Wind-down in Singapore begun, to be completed by mid year →
• Manufacturing in Des Moines to be transferred to Gainesville →

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Wind-down of manufacturing in Singapore

• Marel is refocusing its product portfolio to concentrate on areas of competitive advantage and to strengthen its market position
• At the same time, Marel is stepping up sales and service activities in Asia with a more focused market approach
• Wind-down in Singapore expected to be finished before mid-year 2015
• Will increase operational profit in 2H 2015 and onward

Marel is entering into partnership to continue to provide freezing solutions for integrated solutions to its customers

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U.S. manufacturing moving to Gainesville, Georgia

• Manufacturing in Des Moines to be transferred to existing facility in Gainesville
• In line with Marel's strategy of consolidating its manufacturing platform into few multi-industry sites
• Transition has already begun, with completion before year-end 2015
• Costs will be booked as one-off costs in Q1 2015 with benefits taking effect in 2016 and onwards
• At the same time Marel is investing in a new innovation center in Des Moines

Marel in Des Moines provides high quality equipment to sausage producers all over the world.

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Dynamic and growing U.S. market served by 600 Marel employees

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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

2015

Organic growth

Solid operational improvement

Good cash conversion

2016

Organic growth

Solid operational improvement

Good cash conversion

2017

Organic growth

> 100 million EBIT

Good cash conversion

Total estimated cash-out cost of refocusing €25 million

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Q&A

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Disclaimer

• 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.

• The information set out in this Presentation may be subject to updating, completion, revision and amendment and such information may change materially. Even though Marel hf. has given due care and attention in the preparation of this Presentation, no representation or warranty, express or implied, is or will be made by Marel hf. as to the accuracy, completeness or fairness of the information or opinions contained in this Presentation and any reliance the recipient places on them will be at its own sole risk. Without prejudice to the foregoing, Marel hf. does not accept any liability whatsoever for any loss howsoever arising, directly or indirectly, from use of this Presentation or its contents or otherwise arising in connection therewith. Any recipient of this Presentation is recommended to seek its own financial advice.

• There is no representation, warranty or other assurance that any of the projections in the Presentation will be realized. The recipient should conduct its own investigation and analysis of the business, data and property described herein. Any statement contained in this Presentation that refers to estimated or anticipated future results or future activities are forward-looking statements which reflect current analysis of existing trends, information and plans. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially and could adversely affect the outcome and financial effects of the plans and events described herein. As a result, the recipient is cautioned not to place undue reliance on such forward-looking statements.

• Transactions with financial instruments by their very nature involve high risk. Historical price changes are not necessarily an indication of future price trends. Any recipient of this Presentation are encouraged to acquire general information from expert advisors concerning securities trading, investment issues, taxation, etc. in connection with securities transactions.

• This Presentation and its contents are confidential and may not be further distributed, published or reproduced, in whole or in part, by any medium or in any form for any purpose, without the express written consent of Marel hf. By accepting this Presentation the recipient has agreed, upon request, to return promptly all material received from Marel hf. (including this Presentation) without retaining any copies. In furnishing this Presentation, Marel hf. undertakes no obligation to provide the recipient with access to any additional information or to update this Presentation or to correct any inaccuracies therein which may become apparent.

• The distribution of this Presentation, or any of the information contained in it, in other jurisdictions than the Republic of Iceland may be restricted by law, and persons into whose possession this Presentation comes should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the laws of any such other jurisdictions.

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Thank you
Talk your
Dank u wel
Mange tak

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