Q4 and full year 2016 results
08 Feb 2017
All amounts in EUR
Q4 2016 – Order intake at all-time high
- Revenue for Q4 2016 totaled 250.0m [Q4 2015: 201.9m]. On a pro forma basis, revenue in Q4 2015 was 248.8m.
- EBITDA for Q4 2016 was 47.3m or 18.9% of revenue [Q4 2015: Adj. EBITDA** 30.0m or 14.9% of revenue]. Pro forma adj. EBITDA** Q4 2015 was 37.9m or 15.2% of revenue.
- EBIT* for Q4 2016 was 35.1m or 14.0% of revenue [Q4 2015: Adj. EBIT** 22.2m or 11.0% of reve-nue]. Pro forma adj. EBIT** in Q4 2015 was 34.9m or 14.0% of revenue.
- Net result for Q4 2016 was 22.6m [Q4 2015: 9.9m]. Basic earnings per share were 3.15 euro cents in Q4 2016 [Q4 2015: 1.40 euro cents].
- Cash flow from operating activities before interest and tax in Q4 2016 was 74.3m [Q4 2015: 26.9m]. Net debt/EBITDA is x2.25 at the end of Q4 2016.
- The order book was at 349.5m at the end of Q4 2016 compared with 305.1m at the end of Q3 2016 [Q4 2015: 180.9m]. On a pro forma basis the order book at end of Q4 2015 was 319.8m.
Full year 2016 – Solid performance with 14.6% EBIT*
- Pro forma revenue for 2016 totaled 983.0m [2015 pro forma revenue 975.8m]. Revenue in 2016 was 969.7m compared to 818.6m in 2015.
- Pro forma EBITDA was 179.7m or 18.3% of revenue [2015 pro forma adj. EBITDA** 175.7m or 18.0% of revenue]. EBITDA in 2016 was 175.4m (18.1% of revenue) compared to adj. EBITDA** of 135.8m in 2015 (16.6% of revenue).
- Pro forma EBIT* was 143.5m or 14.6% of revenue [2015: pro forma adj. EBIT** 133.7m or 13.7% of revenue]. Adj. EBIT* in 2016 was 139.4m (or 14.4% of revenue) compared to adj. EBIT** of 99.9m in 2015 (or 12.2% or revenue).
- Net result for 2016 was 75.8m [2015: 56.7m]. Earnings per share were 10.59 euro cents compared with 7.93 euro cents in 2015.
- Cash flow from operating activities before interest and tax was 179.0m [2015: 119.7m]. Net interest bearing debt at the end of the year 2016 was 403.6m compared with 142.8m at the end of 2015.
In Q4 2016 order intake was at a record level totaling 295 million, with strong order intake of Greenfield projects for customers in the poultry, meat and fish industries. Throughout the year order intake remained strong in modernization and maintenance. The uptick in order intake of Greenfields during Q4 compared with previous quarters is in line with what was previously communicated during the Q3 results. During the Q3 results presentation, management lifted the outlook for larger projects after rather soft conditions in the beginning of 2016. The order book at the end of 2016 is at 350 million compared with 320 million at year-end 2015.
Marel’s revenue in 2016 was 983.0 million compared with 975.8 million in 2015 on a pro forma basis. Pro forma EBIT* increased between years to 143.5 million (14.6%) compared with 133.7 million (13.7%). Cash flow was strong in 2016 leading to net debt/EBITDA of x2.25 at year-end 2016 compared with x2.9 after the acquisition of MPS in the beginning of the year.
The Board of Directors proposes that a dividend of 2.14 euro cents per share will be paid for the operational year 2016. The estimated total dividend payment, based on current outstanding shares, will be 15.3 million corresponding to approximately 20% of profits for the year. The proposed dividend is in line with Marel’s targeted capital allocation and dividend policy. This is in line with the dividend policy of 20-40% of net results and the targeted capital structure of x2-3 net debt/EBITDA.
In addition, the Board of Directors has authorized management to purchase own shares in 2017 for up to a value of 15 million to be used as payment for potential future acquisitions.
Marel’s management expects 4-6% average annual market growth in the long term. Marel aims to grow organically faster than the market based on good customer relations and the continuous introduction of revolutionary products to assist processors advance their business. Results may vary from quarter to quarter due to general economic developments, fluctuations in orders received and timing of deliveries of larger systems. In addition Marel’s aim is to strengthen product offering and stimulate further growth through strategic acquisitions.
Arni Oddur Thordarson, CEO:
“The year 2016 was a great year for Marel. We are closing Q4 with all-time high order intake. The orders were strong in poultry, meat and fish. Our customers are setting up state of the art processing plants in Asia, South- America, North-America and Europe that will enable them to offer affordable quality food. As well exciting orders in Africa and the Middle-East were secured.
We finalized the acquisition of MPS at the beginning of the year allowing Marel to become a full-line supplier to the meat industry. Integration is on track and the acquisition is delivering value to customers and shareholders. Earnings per share increase by 34% year on year. Our financials and cash flow are strong and net debt/EBITDA is x2.25, well within our capital structure. We have to bear in mind that we closed the acquisition of MPS without issuing any new shares.
We continue on the growth path. Over the course of the year we have invested well in our infrastructure and introduced steady flow of revolutionary products to advance the business of our customers.
Finally, I would like to thank our customers and employees for an eventful and enjoyable year. With passion and dedication, we are transforming the way food is processed.”
Refocusing and organizational changes
From April 1, 2017 David Wilson will replace Remko Rosman as Managing Director of Marel Meat. On February 8, 2017 Jesper Hjortshøj will replace David Wilson as Managing Director of further processing activities within Marel.
Management changes in Marel Meat
MPS meat processing systems have since 2005 been under the leadership of Remko Rosman and has during that time enjoyed good growth as well as strengthened its competitive positioning. Remko Rosman will now take on new challenges within the food sector in non-competition with Marel.
By acquiring MPS in January 2016, Marel became a global leader in developing full-line solutions and equipment for the meat processing industry. The integration between Marel and MPS is on track. The main focus in 2016 was on combining the front-end sales teams and aligning financial reporting. Gradually the focus will shift towards integrating the back-end of the business such as supply chain and service activities.
Between 2012 and 2016, David Wilson was Managing Director of Marel Meat and was instrumental in the acquisition of MPS. He has been with Marel since 1998 and a member of the Executive Team since 2013.
Marel gearing up for growth in further processing after successful refocusing
Marel is at the forefront of providing full-line solutions to the poultry, meat and fish industries, from primary processing through secondary and further processing. In 2016, David Wilson led the successful streamlining of further processing activities within Marel. In Q4 2016, Marel rationalized the further processing product portfolio, streamlined the organizational set-up and replaced several managers. Marel’s further processing team focuses on innovation, service and product management while sales are mainly channeled through Marel’s poultry, meat and fish teams.
From February 8 2017, Jesper Hjortshøj will lead Marel’s activities in further processing as Managing Director and will join Marel’s Executive team. Under the leadership of Jesper Hjortshøj innovation efforts and product management will be supported and strengthened to capture future growth within the dynamic and growing market for sausage and convenience food. Jesper Hjortshøj has been with Marel since 2006 in various leadership positions including Manager in Strategy and Portfolio for Global Innovation, Product Center Manager and Marketing Manager.
* Operating income adjusted for amortization of acquisition-related intangible assets (PPA).
** Adjusted for refocusing cost related to the Simpler, Smarter, Faster program and for acquisition costs. Pro forma results include MPS numbers. Pro forma numbers are presented to provide better comparison.
Statements in this press release that are not based on historical facts are forward-looking statements. Although such statements are based on management’s current estimates and expectations, forward-looking statements are inherently uncertain. We, therefore, caution the reader that there are a variety of factors that could cause business conditions and results to differ materially from what is contained in our forward-looking statements, and that we do not undertake to update any forward-looking statements. All forward-looking statements are qualified in their entirety by this cautionary statement.