Marel — Investor Presentation 2016

Feb 4, 2016

Q4 and full year 2015 presentation

February 4, 2016

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Cmarel Innovation Through Partnership

Year of profitable growth and strategic moves

Arni Oddur Thordarson, CEO

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Full year 2015: Year of profitable growth and strategic moves

imarel Innovation Through Partnership

• Revenue of €819 million [2014: 713m]
• Order intake of €825 million [2014: 755m]
• Adj. EBIT €99.9 million or 12.2% [2014: 6.8%]
• Adj. EBITDA €135.8 million or 16.6% [2014: 11.7%]
• Net result €56.7 million [2014: 11.7m]
• Earnings per share 7.93 eurocents [2014: 1.60]
• Simpler, Smarter, Faster successfully concluded and focus shifts towards full potential

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

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iMareI Innovation Through Partnership

Q4 2015: Solid performance, MPS acquisition & long term financing

• Revenue of €202 million [Q4 2014: 200m]
• Good geographical and product mix
• Order intake of €195 million [Q4 2014: 206m]
• Adj. EBIT €22.2 million or 11.0% [Q4 2014: 8.0%]
• Adj. EBITDA €30.0 million or 14.9% [Q4 2014: 14.1%]
• Net result €9.9 million [Q4 2014: 3.0m]
• Earnings per share 1.40 eurocents [Q4 2014: 0.41]

* Adjustments in Q4 consist of €4.3 million in refocusing costs and €3.3 million in acquisition costs

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imarel
Innovation Through Partnership

Order book at a good level at the end of 2015

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imarel
Innovation Through Partnership

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

Marel Innovation Through Partnership

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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imarel
Innovation Through Partnership

Linda Jonsdottir, CFO

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Full year: Business results

marel
Innovation Through Partnership

EUR thousands	FY 2015	FY 2014	Change in %
Revenue	818,602	712,554	14.9
Gross profit before refocusing cost	319,515	255,797	24.9
as a % of revenue	39.0	35.9
Before refocusing and acquisition costs
Result from operations (adjusted EBIT)	99,895	48,778	104.8
as a % of revenue	12.2	6.8
Adjusted EBITDA	135,751	83,666	62.3
as a % of revenue	16.6	11.7
After refocusing and acquisition costs
Result from operations (EBIT)	81,613	29,178	179.7
as a % of revenue	10.0	4.1
EBITDA	120,813	66,698	81.1
as a % of revenue	14.8	9.4
Net result	56,696	11,731	383.3
Orders received (including service revenues)	824,609	754,996	9.2
Order book	180,887	174,880	3.4

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imarel

Innovation Through Partnership

Q4 2015: Business results

EUR thousands	Q4 2015	Q4 2014	Change in %
Revenue	201,913	200,018	0.9
Gross profit before refocusing cost	79,864	75,413	5.9
as a % of revenue	39.6	37.7
Before refocusing and acquisition costs
Result from operations (adjusted EBIT)	22,233	16,058	38.5
as a % of revenue	11.0	8.0
Adjusted EBITDA	30,024	28,122	6.8
as a % of revenue	14.9	14.1
After refocusing and acquisition costs
Result from operations (EBIT)	14,626	8,493	72.2
as a % of revenue	7.2	4.2
EBITDA	23,599	20,989	12.4
as a % of revenue	11.7	10.5
Net result	9,862	2,995	229.3
Orders received (including service revenues)	195,028	205,655	(5.2)
Order book	180,887	174,880	3.4

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Firm steps taken to improve profitability

marel Innovation Through Partnership

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Marel enters 2016 with order book of EUR 181 million

marel Innovation Through Partnership

| Net increase
in 9M 2015
13 million | Orders
received
in quarter
195 million | Revenues
(booked
off)
202 million |
| --- | --- | --- |
| End of 2014
175 million | End of
Q3 2015
188 million | End of 2015
181 million |
| Q4 2014 | Q3 2015 | Q4 2015 |

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Cmarel Innovation Through Partnership

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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imarel
Innovation Through Partnership

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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imarel
Innovation Through Partnership

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	Business combinations	Dividends paid	* Tax on dividend, currency effect and change in capitalized finance charges
								Other Items*	Decrease in net debt
119.7 million	12.3 million	26.9 million	80.5 million	13.8 million	33.6 million	9.1 million	3.5 million	7.1 million	31.6 million

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imarel
Innovation Through Partnership

Strong performance and long term financing enabling acquisition of MPS

• Net debt / EBITDA leverage 1.05 at year end
• Opening leverage after acquisition estimated to be below 3 x Net debt / EBITDA
• Board of Directors proposes to pay out 20% of net profit of 2015 as dividend in line with dividend policy of 20-40%
• Senior long term financing for the whole group
• Matures in November 2020
• Interest terms are initially EURIBOR / LIBOR plus a margin of 275 basis points with margin grid depending on leverage
• ABN Amro Bank, ING Bank and Rabobank bookrunning mandated lead arrangers

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iMareI Innovation Through Partnership

Arni Oddur Thordarson, CEO

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Simpler, Smarter, Faster successfully concluded

marel Innovation Through Partnership

Key objectives

Refocusing of product portfolio, leveraging our strengths, and focus on 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

At the customer for the customer while refocusing

• Market approach strengthened and product portfolio rationalized - non-core businesses sold or discontinued
• 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
• Adjusted EBIT of 100 million compared to 43 million in 2013
• 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 organic and acquisitive growth
• Marel has made strategic investments in innovation and IT-platforms to further advance the business

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imarel
Innovation Through Partnership

MPS acquisition – strategic and cultural fit

• 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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Large market with great growth potential

marel Innovation Through Partnership

• Pork consumption growing globally – China represents roughly half of the consumption
• Commercialization of primary processing of pork is at a relatively high level in developed markets
• Still at a relatively low level in China and Russia (estimated at 45% and 74% respectively)
• Poultry continues to be the main growth driver of meat consumption, especially due to its low price

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Revenue by business segment pre and post acquisition

inarel

Innovation Through Partnership

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imarel
Innovation Through Partnership

Strong manufacturing platform for full potential

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Cmarel Innovation Through Partnership

Key pro-forma figures of Marel and MPS

FY 2015*	Marel	MPS	Marel + MPS
Order intake	€825 million	€190 million	> €1.0 billion
Revenue	€819 million	€158 million	€977 million
Adjusted EBIT	€100 million	€33 million	€133 million
Employees	3,900	700	4,600

• Based on audited Marel numbers and preliminary unaudited MPS numbers (based on Dutch GAAP)

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Simpler, Smarter, Faster: 2014-2015

MPS

Guidance 2016

Product portfolio optimized

At the customer, for the customer

After a period of strong growth, management expects modest organic revenue and EBIT growth in 2016 compared to 2015 on a pro forma basis, before purchase price allocation adjustments

Manufacturing footprint optimized

2014	2015	MPS	Pro forma 2015
Revenue growth 7.7%
Adj. EBIT €48.8 m
Free cash flow €75.5m	Revenue growth 15%
Adj. EBIT €99.9m
Free cash flow €80.5m		Revenue €977m
Adj. EBIT €133m
Order book €320m

Cash-out cost to date €16 million compared to estimated total cash-out cost of below €20-25 million throughout the program

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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.

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.

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