Marel — Investor Presentation 2016

Mar 2, 2016

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CEO's operational report

Arni Oddur Thordarson, CEO

ADVANCING

FOOD PROCESSING

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Annual results

CEO's operational report

ADVANCING

FOOD PROCESSING

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Year of profitable growth and strategic moves

• 15% revenue growth
• Adj. EBIT of €100 million [2014: 49m]
• Net result of €57 million [2014: 12m]
• Earnings per share of 7.93 cents [2014: 1.60]
• The Board of Directors proposes a dividend of 1.58 cents per share corresponding to approximately 20% of profits for the operational year 2015
• Marel concluded successful refocusing program and entered into acquisition of MPS to become full line provider in Meat

• Adjustments in 2015 consist of €15.0 million in refocusing costs and €3.3 million in acquisition costs

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Solid operational performance with strong cash flow

EBITDA improvement and strong cash flow has driven Net Debt / adj. EBITDA down to 1.05 enabling MPS acquisition

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Business overview for 2015

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Other segments account for 2% of revenue and include acquisition cost and non-recurring items

Poultry

Very strong year for Marel's poultry segment with good volume and profitability.

Good mixture of greenfields, modernization projects, and maintenance business around the globe.

55% of revenue
18.8% adj. EBIT

Fish

Salmon and Whitefish delivering good growth and results while the on-board business is underperforming.

FleXicut continues to impress customers and 4 systems were sold at the back end of 2015

17% of revenue
8.3% adj. EBIT

Meat

Operations gradually improving from previous years.

Result in 2015 fully in line with targets.

Meat after MPS acquisition accounts for 30% of revenue and EBITDA.

14% of revenue
7.4% adj. EBIT

Further Processing

Unacceptable results in 2015 despite improvement in volume and margins at the end of the year.

Further streamlining and investments planned to strengthen Marel's position in further processing of Poultry, Meat and Fish.

12% of revenue
-1.5% adj. EBIT

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Business results

EUR thousands	FY 2015	% of revenue	FY 2014	% of revenue
Revenue	818,602		712,554
Gross profit before refocusing cost	319,515	39.0	255,797	35.9
Before refocusing and acquisition costs
Selling and marketing expenses	110,438	13.5	100,466	14.1
Research and development expenses	57,004	7.0	53,407	7.5
Administrative expenses	55,955	6.8	53,171	7.5
Before refocusing and acquisition costs
Result from operations (adjusted EBIT)	99,895	12.2	48,778	6.8
Adjusted EBITDA	135,751	16.6	83,666	11.7
After refocusing and acquisition costs
Result from operations (EBIT)	81,613	10.0	29,178	4.1
EBITDA	120,813	14.8	66,698	9.4
Net result	56,696	6.9	11,731	1.6
Orders received (including service revenues)	824,609		754,996
Order book	180,887		174,880

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mixed

Condensed consolidated balance sheet

ASSETS (EUR thousands)

	31/12 2015	31/12 2014
Non-current assets
Property, plant and equipment	89,005	96,139
Goodwill	389,407	387,103
Other intangible assets	107,018	114,916
Receivables	443	94
Deferred income tax assets	10,029	7,873
	595,902	606,125
Current assets
Inventories	99,382	88,450
Production contracts	17,261	29,123
Trade receivables	99,696	77,125
Assets held for sale	3,799	2,500
Other receivables and prepayments	29,139	23,551
Cash and cash equivalents	92,976	24,566
	342,253	245,315
Total assets	938,155	851,440

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Condensed consolidated balance sheet (continued)

LIABILITIES AND EQUITY (EUR thousands)	31/12 2015	31/12 2014
Equity	446,739	427,498
LIABILITIES
Non-current liabilities
Borrowings	217,287	180,278
Deferred income tax liabilities	15,943	11,308
Provisions	6,943	7,292
Derivative financial instruments	3,057	5,399
	243,230	204,277
Current liabilities
Production contracts	78,330	64,958
Trade and other payables	139,227	122,479
Current income tax liabilities	3,221	4,185
Borrowings	18,449	18,635
Provisions	8,959	9,408
	248,186	219,665
Total liabilities	491,416	423,942
Total equity and liabilities	938,155	851,440

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Cash flow composition in 2015 and change in net debt

Operating activities (before interest & tax)	Tax	Invest- ment activities	Free cash flow	Net finance cost	Treasury shares	33.6 million	Business combin- ations	Dividends paid	Other Items*	Decrease in net debt
119.7 million	26.9 million	33.6 million	9.1 million	3.5 million	7.1 million					31.6 million

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

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Strong performance and cashflow enabling strategic moves

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cMareL

Long term financing closed in January 2016

• Parallel to the acquisition of MPS, Marel secured and closed long-term senior financing

• Successful transaction was completed with oversubscription from a diverse group of international banks

• The approximately €670 million senior loan facilities have maturity in November 2020

• The financing is at favorable terms in line with Marel's financial strength and current market conditions

• Initial interest terms are EURIBOR/LIBOR + 275 bpoints

• Which will vary in line with Marel's leverage ratio
• Opening leverage post acquisition below 3 x Net debt / Adj. EBITDA

Right strong banks support Marel operations

Rabobank

ING

HSBC

ABN·AMRO

Unicredit Bank

Nordea

BNP PARIBAS

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II | Simpler, Smarter and Faster Marel and Strategic Moves

CEO's operational report

ADVANCING FOOD PROCESSING

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Entering 2016 as a Simpler, Smarter, Faster Marel

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Simpler, Smarter, Faster: 2014-2015

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

Revenue growth 15%

Adj. EBIT €99.9m

Free cash flow €80.5m

• Manufacturing footprint reduced from 19 to 9 sites, leading to higher quality and more agile cost base
• Revenue increased by 25% in two years while number of employees decreased
• Cash out in relation with the program is €16 million compared to an initial target of €20-25 million
• Simplifying and streamlining the operations was a prerequisite for further growth

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MPS acquisition – strategic and cultural fit

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• Marel becomes a full line supplier in meat with the acquisition of MPS
• MPS and Marel are long term partners in the field
• Complementary geographical presence and product portfolio leads to increased economies of scale and cross selling opportunities
• Better serving the customer needs and adding value to our customers
• MPS has strong management and highly skilled employees with long tenure

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Revenue by business segment pre and post acquisition

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Strong manufacturing platform for full potential

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III | Who we are

CEO's operational report

ADVANCING FOOD PROCESSING

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Leading global provider of systems and services

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	Primary processing	Secondary processing	Further processing
	Primary processing	Secondary processing	Further processing
	Primary processing	Secondary processing	Further processing
	Marel presence	Application gaps to reach full-line offering

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MPS acquisition – strategic and cultural fit

marel

• Marel becomes a full line supplier in meat with the acquisition of MPS
• MPS and Marel are long term partners in the field
• Complementary geographical presence and product portfolio leads to increased economies of scale and cross selling opportunities
• Better serving the customer needs and adding value to our customers
• MPS has strong management and highly skilled employees with long tenure

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Remko Rosman to join Marel's Executive Team

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Revenue reaching €1 billion with best in class profitability

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2005:
Revenue of €129 million with EBIT of €10 million

Pro forma 2015:
Revenue of €977 million with EBIT of €133 million

Organic revenue growth post Stork acquisition has been 6% with 22% increase in earnings per share annually

Today, Marel is the leading global provider of advanced processing systems and services to the poultry, meat and fish industries

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Thank you

ADVANCING

FOOD PROCESSING