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Marel Investor Presentation 2021
2191_rns_2021-12-02_a9ee3bee-5fe6-4ad7-ab2a-2b6a5d10b613.pdf
Investor Presentation
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Intellectual
Capital Markets Day
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Disclaimer
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The purpose of this presentation (the "Presentation") is to provide an overview of Marel hf. (the "Company"). This Presentation has been prepared and issued by and is the sole responsibility of the Company and is being furnished to each recipient solely for its own information. For the purposes of this notice, "Presentation" means this document, its contents or any part of it, any oral presentation, any question or answer session and any written or oral material discussed or distributed during the Presentation meeting.
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No representation or warranty, express or implied, is given by or on behalf of the Company or its directors, officers, employees, agents, affiliates as to, and no reliance should be placed on, the fairness, accuracy, reasonableness or completeness of the information or opinions contained in this Presentation or otherwise made available and no responsibility or liability (including in respect of direct, indirect or consequential loss or damage) is assumed by any such persons for such information or opinions or for any errors or omissions.
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Except where otherwise indicated in the Presentation, the information provided therein is based on matters as they exist at the date of preparation of the Presentation and not as of any future date and will be subject to updating, revision, verification and amendment without notice and such information may change materially. The Company is under no obligation to update or keep current the information contained in this Presentation to which it relates or to provide the recipient of with access to any additional information that may arise in connection with it and any opinions expressed in this Presentation are subject to change without notice. Nothing contained in this Presentation is or should be relied on as a promise or representation as to the future. This document has not been approved by any regulatory or supervisory authority.
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This Presentation includes market share and industry data obtained by the Company from industry publications and surveys and internal surveys. The Company may not have access to the facts and assumptions underlying the numerical data, market data and other information extracted from these sources. As a result, the Company is not able to verify such numerical data, market data and such other information, and assumes no responsibility for the correctness of any market share or industry data or such other information included in this Presentation or provided at the Presentation. Certain of the market, economic and industry data contained in this presentation comes from the Company's own internal research and estimates based on the knowledge and experience of the Company's management in the markets in which the Company operates. While the Company reasonably believes that such information is reasonable and reliable, they, and their underlying methodology and assumptions, have not been verified by any independent source for accuracy or completeness and are subject to change. Accordingly, undue reliance should not be placed on the market, economic and industry data contained in this Presentation.
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Certain statements, beliefs and opinions in this Presentation are, or may be deemed to be, "forward looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "plans", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology or by their context. These forward-looking statements include all matters that are not historical facts. They appear in a number of places and include, but are not limited to, statements regarding the Company's intentions, beliefs or current expectations concerning, amongst other things, results of operations, financial condition, liquidity, prospects, growth and strategies. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. A multitude of factors including, but not limited to, changes in demand, competition and technology or the regulatory environment, can cause actual events, performance or results to differ significantly from any anticipated development. Forward-looking statements are not guarantees of future performance and the actual results of operations, financial condition and liquidity, and the development of the industry in which the Company operates, may differ materially from those made in or suggested by the forward-looking statements set out in this Presentation. Past performance of the Company cannot be relied on as a guide to future performance. Forward-looking statements speak only as at the date of this Presentation and the Company expressly disclaims any obligations or undertaking to release any update of, or revisions to, any forward-looking statements in this Presentation. As a result, you are cautioned not to place any undue reliance on such forward-looking statements. In addition, even if the results of operations, financial condition and liquidity of the Company, and the development of the industry in which the Company operates, are consistent with the forward-looking statements set out in this Presentation, those results or developments may not be indicative of results or developments in subsequent periods.
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This Presentation does not constitute, and should not be construed as, part of any offer or invitation for the sale or purchase of securities and it is not intended to provide the basis of any investment decision in any jurisdiction, nor does it purport to give legal, tax or financial advice. Nothing herein shall be taken as constituting the giving of investment advice and this Presentation is not intended to provide, and must not be taken as, the basis of any decision and should not be considered as a recommendation to acquire any securities of the Company. The recipient must make its own independent assessment and such investigations as it deems necessary.
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Any sale of the Company's ordinary shares has not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), and will not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. There will be no public offer of the ordinary shares in the United States (for these purposes, the "United States" means the United States of America, its territories and possessions, any State of the United States, and the District of Columbia).
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Digitalization
Agenda
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- Welcome and introduction
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Tinna Molphy, - Director IR
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Digitally transforming food processing
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Arni Sigurdsson, - Chief Strategy Officer and EVP Strategic Business Units
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From data-driven foundation to insights-driven future
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Hjalti Thorarinsson, - VP Innova Software
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Next steps in Marel's digital evolution
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Anna Kristin Palsdottir, - EVP Innovation
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Q&A panel discussion
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Digitalization
TRANSFORMING FOOD PROCESSING
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Arni Sigurdsson
Digitally transforming food processing
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Arni Sigurdsson
Chief Strategy Officer and EVP Strategic Business Units
Arni Sigurdsson joined Marel in 2014. He leads the Strategy and M&A as well as the business units of Retail and Food Service Solutions and Innova Software. Sigurdsson serves on the board of Worximity Technology Inc. Before joining Marel, he was an associate at AGC Partners. Prior to that, he worked at Landsbanki Islands, where he supported Marel on the acquisition of Stork Food Systems.
Education
MBA, Harvard Business School
BS, Industrial Engineering, University of Iceland
8 years with Marel / 10 years in Industry
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Unity
We are united in our success
Innovation
Innovation drives the value we create
Excellence
Excellence is what differentiates us
- In partnership with customers, we are transforming the way food is processed
- The Marel vision is of a world where quality food is produced sustainably and affordably
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Marel is a global pure-play provider of solutions, software and services to customers across the value chain
Line solutions provider...
- One-stop shop for the customer
- Seamless integration & more efficiency
- Strong competitive advantage
...with standard and modular offering...
- Scalable: Less engineering & easier to manufacture
- Improved service
- Better customer experience
...market leading proprietary software...
- Traceability and sustainability solutions
- Links equipment to function as single entity
- Real-time actionable insights to improve operations
...across poultry, meat and fish
- More resilient business model
- Technology transfer across industries
- Better utilization of resources
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Digitalization will enhance our strategy
Line solutions provider...
- ☑ One-stop shop for the customer
- Seamless integration & more efficiency
- Strong competitive advantage
...with standard and modular offering...
- ☑ Scalable: Less engineering & easier to manufacture
- Improved service
- Better customer experience
...market leading proprietary software...
- ☑ Traceability and sustainability solutions
- Links equipment to function as single entity
- Real-time actionable insights to improve operations
...across poultry, meat and fish
- ☑ More resilient business model
- Technology transfer across industries
- Better utilization of resources
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Improved line & factory optimization
Seamless integration of equipment allowing data driven insights to be used across the value chain to improve performance
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Modular- and standardized portfolio
Prerequisite for Marel to develop and deliver standardized digital solutions, create scalability and remain an indispensable maintenance partner
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Stronger and broader portfolio
- Marel is already developing attractive digital food processing solutions to address customers needs and support the creation of a more balanced, demand driven food value chain
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Best-in-class sustainability solutions
Accelerated through digitalization allows our customers to meet increasing demands for quality food produced in a safe and sustainable way
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Marel's software and advanced solutions will enable us to transform the way food is processed for the benefit of our customers, consumers and the environment
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Digital is instrumental to achieving Marel's targets
EUR 3 billion in revenues by year-end 2026
50% from software, service and spares by year-end 2026
Improved margins and scalability
Organic +4-6%
Acquired 5-7%
2020
2026
Long-term targets 2026
Revenue CAGR 2017-2026 ~12%
EPS Grow faster than revenue
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Processors are actively exploring how digital can help them win in the future food processing market
Connecting the value chain
- Increasing regulatory requirements
- Improving planning and operations in a demand driven value chain (pull based)
- Limited consumer data availability reducing value analytics & benchmarking
Increasing performance
- Yield
- Throughput
- Quality
- Food safety
Improving uptime
- Advanced service needs
- Predictive/Preventive
- Remote resolution
- Reducing cost of service
Increasing sustainability requirements
- Increased food demand from rising population
- Global animal diseases
- Lack of accessible workforce
- Reducing environmental impact of food processing
Managing complexity
- SKU proliferation and raw material variability
- Maximizing value requires complex targeted production
CME
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Marel is in a key position to support and partner with customers in their digital journey
| Key purchasing criteria when choosing a digital partner | Importance |
|---|---|
| ☑ Existing relationship | ● |
| ☐ Digital capabilities | ● |
| ☑ Execution capability | ● |
| ☑ Open for 3^{rd} party hardware and software | ● |
| ☑ Cost vs benefit | ● |
| ☑ Support | ● |
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Digital vision
Be the digital partner of choice for the food processing industry, and enable customers to sustainably maximize value creation by providing the digital products and platform for inter-connectivity and optimization
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Core beliefs of our digital vision
Standardized, scalable platform will enable connected ecosystem across the value chain
Be the digital partner of choice for the food processing industry, and enable customers to sustainably maximize value creation by providing the digital products and platform for interconnectivity and optimization
Integrated solutions and combination of hardware, software & service will drive growth
Data combined with deep process knowhow will drive significant customer value
Digitalizing the installed base is key to success
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Digitalzetten
TRANSFORMING FOOD PROCESSING
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Hjalti Thorarinsson
From data-driven foundation to insights-driven future
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Hjalti Thorarinsson
Vice President, Innova Software
Hjalti Thorarinsson became VP of Innova Software in September 2017. Prior to his current role, he spent 11 years working for Microsoft in the US where he held various positions in sales and business development, including Director of Business Development for Artificial Intelligence. Thorarinsson has extensive international leadership and startup experience in the technology industry. He has served as a Board Member of Origo hf., a Nordic IT service company, since 2018 and a Chairman of the Board since 2020.
Education
MBA, Massachusetts Institute of Technology (MIT)
BSc, Computer Science, University of Iceland
4 years with Marel / 4 years in Industry
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Marel has a strong foundation in digital
Market leader in automated machines
- Market-leading solutions and widest industry portfolio
- Frontline presence in 6 continents and industry's largest installed base
- Comprehensive integrated offering
Strong innovation commitment
- 6% revenue commitment to R&D
- Over 300 software developers & engineers
- Demonstrated track record of transferring innovative solutions across industries
- Deep process knowhow
Leading software products and pilots
- Broad portfolio with 40+ products
- Leading software solution in the food processing market
- Robust development roadmap with further 20+ products incl. production planning
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Marel has a number of software modules allowing customers to fully control their production
- Powerful end-to-end solution allowing food processors to manage their factories by linking equipment & processes to function as a single entity
- Ensures reliable centralized data collection providing real-time data insights and historical trends analysis reports
- Integrated traceability engine collects, stores and analyzes data in real time, enabling full traceability throughout production
- Data analytics identify improvement opportunities and highlight potential issues in real time, enabling processors to maximize productivity
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Marel's software solutions offer numerous advantages to food processors in managing their production
Operations
"We've been able to solve all the business challenges around traceability, packaging, order control and inventory management as well as standardize platforms across facilities."
Jarred Brand
Manufacturing Engineering
and Technology
Trident
Fish
Performance management
"The way the data is presented allows our business to make quicker, sharper decisions. This is quite valuable, rather than working with hearsay or getting the correct information with a delay. Our people started seeing what's possible with Innova."
Mark Hilson
ICT Manager
HAZEDENES
Poultry
Sustainability
"Today, we are proud of our smart factory, where there is a high level of connectivity, making it easier for Brim to meet customer orders quickly and precisely, making full use of the valuable raw material."
Gisli Kristjansson
Production Manager
BRIM
Fish
Traceability
"Marel software allows us to keep records throughout each day and traceability for USDA records from start to finish, which gives me tremendous peace of mind."
Dan Fernandez
Meat Unit Production Manager
KUNA
Meat
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Marel is moving towards enhanced digital offering built on hybrid cloud platform delivering significant benefits
Future of Marel's digital offering
- Factory equipment is fully connected, easy to configure/control and managed via hybrid-cloud infrastructure
- Access to machine data will improve service, accelerate innovation and enable Marel to expand data driven insights to customer
- Suite of food processing solutions to optimize factory performances by managing complexity, ensuring uptime and connecting the value chain
- Marel software delivered via secure digital platform with instant access to upgrades & features via remote installation
- Food processing software ecosystem that supports third party equipment and provides value chain interoperability
Marel benefit
Broader offering & stronger value proposition
Greater standardization & increased scalability
Increased real world insights for future innovation
Stronger integration of Marel products & services
Better service and lower cost
Improved ESG performance
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Marel's digital products fall into five product families focused on food processing customer needs
| Logistics | Optimization of inventory and logistical movements to optimize material flow, reducing labor and logistic cost |
|---|---|
| Planning & optimization | Demand driven optimization of raw material, energy and labor usage while securing delivery of the right products at the right time, quality & quantity |
| Food safety management | Full process setup, documentation and audit trail for food safety & quality assurance, regulatory compliance and traceability of production to safeguard license to operate and drive sustainability |
| Performance management | Real time actionable insights on equipment, line and factory performance to reduce downtime and maximize performance (e.g. yield and throughput) across the food processing footprint |
| Production Control | Seamlessly connect multiple machines together to work as a single entity and allow simple management and remote operations of the line and processing steps |
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Marel future offering will create significant customer benefits and allow them to sustainably improve margins
Marel's digital offering focus
Customer benefit
Improved margins (e.g. uptime, yield & throughput)
Demand driven production optimization
Better installation and services
Greater process insights
Easier value chain integration
Better planning & decision making
Improved ESG performance
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Digital solutions will be instrumental for our customers on their sustainability journey
Ensuring food safety
Food quality control with full audit trail minimizes risk of contamination and enables quick reaction if irregularities occur
Reducing CO₂ footprint
CO₂ measurement through usage of energy, water and other resources enables active management of climate impact
Eliminating food waste
Increase raw material utilization by optimizing raw material allocation based on orders as well as line performance (yield, throughput)
Source to shelf traceability
Products can be traced back to their source by linking every process step of production chain
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Example: Order fulfillment
Part of ‘Planning & Optimization’ product family
- Order fulfillment estimation, based on the evaluation of raw material, orders, priorities and deadlines
- Order scheduling tool, highlighting deadlines, surplus products and orders at risk
- Real-time insight into expected vs actual output of raw material
- Will evolve into supporting demand driven production
- Will be launched next year
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Example: IMPAQT
Part of 'Performance Management' product family
- KPI performance monitoring via single-line, multi-line, and overall production processes
- Shows why a line is not performing, so customer can act on it e.g. improve hanging performance, correct container loading
- Real-time and historical analyses of performance drops allow for earlier interventions to reduce waste products or broken wings
- Ability to benchmark lines across sites to ensure best practices
- Expected customer savings provides payback of less than 2 years with hardware and installation costs
- 9 systems installed and several pending installation
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IMPAQT
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Marel has clear plans to transition existing software solutions to the new cloud platform and develop new solutions
Phase 1 – 2021-2022
Most functionality running on-site in traditional server environment
- Software runs on-premise
- Digital Engine¹ and offering developed across Marel's equipment portfolio
Phase 2 – 2023-2026
Functionality moved to cloud, making operations easier, more interconnected and insights-driven
- Software offering increasingly standardized, repackaged and shifted to cloud platform
- Digital Engine embedded in key Marel equipment, with accompanying digital offering
Phase 3 – 2026+
Hybrid-cloud simplifying deployment, management and optimizing for demand driven production
- Digital offering incl. service delivered via hybrid-cloud
- Platform integration enabling AI optimization of demand driven production
On-premise Cloud Hybrid-cloud
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Note: ¹ Digital Engine is an IoT box installed on machines to provide connectivity to the cloud and provide Marel and customers with basic information such as machine health & production insights
TRANSFORMING FOOD PROCESSING
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Anna Kristin Palsdottir
Next steps in Marel’s digital evolution
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Anna Kristin Palsdottir
Executive Vice President, Innovation
Anna Kristin Palsdottir joined the Executive Team in March 2020. Since joining Marel in 2015, Palsdottir has held various managerial roles within Innovation. Most recently, she was Innovation Director for Cross-Industry. Her broad experience in Innovation prior to that includes Innovation Manager for X-ray Solutions and Infrastructure Manager. Palsdottir has demonstrated excellence in leading cross-functional innovation teams within Marel.
Education
MSc, Production Engineering, Technical University of Berlin
BS, Engineering Management, Reykjavik University
6 years with Marel / 6 years in Industry
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Connectivity is a cornerstone of Marel's overall Digital Strategy
Cloud platform allows us to connect to machines out in the field and collect data
Connected machines are equipped with our first version of Digital Engine (IoT edge device)
Provides both Marel and our customers increased insights via cloud connectivity
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ShareEMS
☐ Video
Connectivity from machine to factory
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Improved service with data
Part of Marel's digital enabled service offering
- Access to real time and historic data insights supports Marel's technical help desks around the world to resolve issues faster
- Access to real time data enables services to proactively support customers' operations
- Technical and operational data is a key enabler to drive more advanced maintenance solutions such as proactive (condition based) and predictive maintenance
*Overall equipment effectiveness
Existing capabilities
Emerging capabilities
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Marel has a three pronged approach for rapidly enabling machine connectivity on its equipment
Current install base
Coverage
Rapidly establish connection to key equipment in the field without updating current capabilities beyond cloud enablement
Product revision
Competitiveness
Upgrade equipment in production to support connectivity out of the box and potentially add new sensors (more data generation capability)
New equipment
Innovation
Integrate connectivity and Digital Engine capabilities as a standard into machine design as part of the product development process (PDP)
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Two pilots are currently in commercialization & rollout phase to pave the way for upcoming equipment
Initial pilots focusing on learnings & consolidating guidelines for further scale-out
Scale-out pilots focusing on breadth & training to ensure organic execution
Capture feedback & learnings, adjust and refine continuously
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Key objective is to develop digital capabilities at scale to create more value for our customers
| Phase 1 – 2021-2022 | Phase 2 – 2023-2026 | Phase 3 – 2026+ |
|---|---|---|
| Machine digitalization | ||
| ●●●○ | Machine digitalization | |
| ●●●●● | Machine digitalization | |
| ●●●●● | ||
| • Increased machine uptime and performance | • Minimized breakdowns & unforeseen stops | • Maximized factory uptime and performance |
| • Reduced service response time and improved remote service resolution | • Increased optimization of production decisions | • Easier demand driven production |
| • Improved performance management | • Minimized recall risk and reduced funding cost via green financing | • Ability to optimize full food processing footprint |
Existing capabilities
Emerging capabilities
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Digital products journey has risks and challenges, but will be mitigated
| Key risks | Mitigating actions | |
|---|---|---|
| Cybersecurity | Microsoft Azure security protocols and ISO 27000 certification | |
| Data proprietorship | Clear data principles and data usage clarified in terms and conditions as well as commercial material | |
| 3^{rd} party access to Marel Platform | Licensed APIs and focus on effortlessness of platform usage | |
| Support of non-Marel machines (e.g. packaging) | Development of API with equipment vendors and standard protocol for Marel Platform interface | |
| Customer willingness to adopt software and data driven solutions | Significant investment in customer engagement, communications and training of commercial personnel |
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Marel's digital journey is instrumental in achieving long-term targets & will have positive business model impact
- ☐ Stronger customer engagement driven by more solution offerings and stronger value proposition
- ☐ Increased software solution sales driven by broader portfolio and improved upsell journey
- ☐ Higher recurring revenues from subscriptions on software and digital enabled services
- ☐ Greater share of wallet with higher attachment rates of software and service level agreements
- ☐ Increased scalability improving return on invested capital
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S60
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Arni Sigurdsson
Chief Strategy Officer and
Executive Vice President, Strategic Business Units
Anna Kristin Palsdottir
Executive Vice President, Innovation
Hjalti Thorarinsson
Vice President, Innova Software
Roger Claessens
Executive Vice President, Poultry
Q&A panel
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Capital Markets Day - The 360° mini-series
Join our series of virtual Capital Markets Day events and explore how Marel delivers growth—globally, digitally, sustainably.
- Growth 11 Nov
- Global reach 18 Nov
- Digitalization 2 Dec
- Sustainability 9 Dec
Register on marel.com/cmd360
Capital Markets Day 2021
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Tinna Molphy
Director of Investor Relations
Marino Thor Jakobsson
Investor Relations
Drofn Farestveit
Investor Relations
Questions
We’re here to help!
+354 563 8001
[email protected]
@Marel_IR / $MAREL
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TRANSFORMING FOOD PROCESSING
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Thank you
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