Marel — Investor Presentation 2016

Jul 28, 2016

marel

Q2 2016 presentation

Arni Oddur Thordarson, CEO,
Linda Jonsdottir, CFO

July 28, 2016

ADVANCING
FOOD PROCESSING

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Q2 2016: Record revenue with 15% EBIT

• Revenue of €264 million
• Q2 2015: 218m, pro forma 253m
• Order intake of €231 million
• Q2 2015: 206m, pro forma 230m
• Order book €307 million
• Q2 2015: 166m, pro forma 272m
• EBIT* €39.7 million or 15.0%
• Adj. EBIT** Q2 2015: 13.6%, pro forma 15.2%
• EPS 3.09 euro cents compared with 2.71 in Q2 2015

*Adjustments in Q2 2016 consist of a €6.6 million amortization of acquisition related intangible assets (PPA)

**Adjusted for refocusing cost related to the refocusing program Simpler, Smarter, Faster.

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Pro forma: Business overview for the first half of 2016

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POULTRY

Strong order intake across the board, record revenue and profitability

Large projects secured in China, U.S. and Hungary

54% of revenue
17.6% EBIT margin

MEAT

Good operation and project execution – integration on track

Marel meat now operates unified sales team that has been cross trained in primary and secondary solutions – focus on increased cross and upselling

32% of revenue
14.0% EBIT* margin

FISH

Large projects are at low level while important sales of FleXicut solutions were secured in 1H

Streamlining of onboard operations in Seattle concluded with reduction of 50 employees going forward

13% of revenue
4.9% EBIT margin

Other segments account for less than 1% of revenue

• Operating income adjusted for amortization of acquisition-related intangible assets

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On track towards best in class profitability

• Operating income adjusted for amortization of acquisition-related intangible assets (PPA).

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Consolidated accounts

ADVANCING

FOOD PROCESSING

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Consolidated: Second quarter financial results

EUR thousands	Q2 2016	Q2 2015	Change in %
Revenue	264,208	218,272	21.0
Gross profit	109,199	84,264	29.6
as a % of revenue	41.3	38.6
Before PPA
Result from operations (EBIT)	39,749	29,659**	34.0
as a % of revenue	15.0	13.6
EBITDA	48,379	37,219**	30.0
as a % of revenue	18.3	17.1
After PPA
Result from operations (EBIT)	33,162	28,537	16.2
as a % of revenue	12.6	13.1
EBITDA	48,379	38,135	26.9
as a % of revenue	18.3	17.5
Net result	22,128	19,516	13.4

** Results are adjusted for refocusing costs related to the refocusing program Simpler, Smarter, Faster.

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Order book at a good level

• Orders received in Q2 2016 amount to 231 million and are at the same level as one year ago
• Order book of 307 million at closing of Q2 2016, compared to 272 million pro forma at the same time in 2015

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Consolidated: Balance sheet

ASSETS (EUR thousands)	30/6 2016	31/12 2015
Non-current assets
Property, plant and equipment	112,869	89,005
Goodwill	633,993	389,407
Other intangible assets	293,707	107,018
Trade receivables	334	443
Deferred income tax assets	10,022	10,029
	1,050,925	595,902
Current assets
Inventories	121,787	99,382
Production contracts	46,117	17,261
Trade receivables	110,975	99,696
Assets held for sale	-	3,799
Other receivables and prepayments	37,264	29,139
Cash and cash equivalents	20,011	92,976
	336,154	342,253
Total assets	1,387,079	938,155

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Consolidated: Balance sheet

LIABILITIES AND EQUITY (EUR thousands)	30/6 2016	31/12 2015
Equity	488,000	446,739
LIABILITIES
Non-current liabilities
Borrowings	458,509	217,287
Deferred income tax liabilities	65,779	15,943
Provisions	6,846	6,943
Derivative financial instruments	10,711	3,057
	541,845	243,230
Current liabilities
Production contracts	133,479	78,330
Trade and other payables	171,415	139,227
Derivative financial instruments	45	-
Current income tax liabilities	10,274	3,221
Borrowings	24,113	18,449
Provisions	17,908	8,959
	357,234	248,186
Total liabilities	899,079	491,416
Total equity and liabilities	1,387,079	938,155

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Q2 2016 cash flow composition and change in net debt

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Operating activities (before interest & tax)	Tax					* Dividends paid, currency effect and change in capitalized finance charges
	1.7 million
43.7 million		Investing activities	Free cash flow	Net finance cost	Sale of treasury shares	Other items*	Decrease in net debt
		11.6 million	30.5 million	4.6 million	2.1 million	4.5 million	23.4 million

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Marel generating a healthy cash flow

• Net debt / EBITDA leverage of 2.7x at end of Q2

• Acquisition of MPS completed within the targeted capital structure with senior loans without issuing any new shares

• Marel is stimulating further revenue and operational profit growth by:

• Streamlining the business
• Continuous innovation

• Investing in the business

• Cash flow remains strong

• Commitment to invest in facilities and equipment
• Utilizing good cash flow to advance the business
• Investment activities are expected to be on average above depreciation level for the coming quarters

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Business & Outlook

ADVANCING

FOOD PROCESSING

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Case study: Long term customer relationship

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Strong business model supporting future growth

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Modernization and standard equipment

• Good increase in standard equipment across all industries and geographies

Greenfields

• Greenfield projects secured in the U.S., Brazil, Hungary and China in 1H 2016

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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Pro forma FY2015
Pro forma 1H 2016
Business Outlook 2016

Revenue €977m
Adj. EBIT** €133m
Order book €320m

Revenue €498m
EBIT* €75.0m
Order book €307m

Long term growth prospects for Marel are promising while short term economic uncertainty has recently increased.

Marel expects modest organic revenue growth and increase in EBIT* between years.

• Operating income adjusted for amortization of acquisition-related intangible assets (PPA)
  ** Adjusted for refocusing cost related to the refocusing program Simpler, Smarter, Master

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marel

Thank you

ADVANCING

FOOD PROCESSING