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Business Operations

Providing sustainable value

As a provider of advanced equipment and systems for food processing, Marel has an obligation to bring new technologies to the market that add value for our customers and our shareholders. But as a global leader, the company’s responsibility extends well beyond that, to embracing sustainable and ethical business practices, and ensuring that its operations benefit society at large.

In pursuit of this goal, Marel relies on a simple and proven business model founded on three pillars – market penetration, innovation and operational excellence. They are at the core of Marel’s commitment to provide long-term and sustainable value for all our stakeholders – customers, shareholders, employees and communities alike.

Marel is proud of the fact that our commitment to providing sustainable value has led to continuous advancement in how food is processed, benefiting consumers all over the world.

Market Penetration

A STRONG FOUNDATION FOR THE FUTURE

Strengthening Marel‘s geographical footprint has been a major priority in the past two years. The company has integrated offices in a number of countries and expanded its presence in up and coming markets. Petur Gudjonsson, Managing Director of Marel‘s International Sales and Service Network, surveils the key focus areas in 2011 and looks at the opportunities that lie ahead.

“Countries we’ve been focusing on this year include France where we‘ve put together a very strong team and are creating new opportunities. We‘ve also put a lot of energy into Brazil and Russia, where we‘ve integrated the former Marel and Stork offices, brought the people together and created a good framework for them to thrive in. Brazil is the breadbasket of the future and it‘s crucial to establish a strong foundation there for what is to come,” says Petur.

China automates

Laying the groundwork for the future is also behind Marel’s decision to bolster its presence in other fast-growing new markets. “We started systematically building up our presence in China 2-3 years ago. We’ve moved fast there and made great strides in both the fish and poultry industries. We can say without hesitation that the future is bright. Increased automation is really a necessity for Chinese processors. They’re competing for labour with the electronics industry and having difficulty attracting workers. The employee turnover is tremendously high.”

The same goes for Southeast Asia where Marel has been developing more of a regional structure. “That way we can make better use of our specialists, by having them serve multiple countries.”

India rising

India is another exciting prospect where the food industry is progressing rapidly. “India is likely to take a giant leap in the next 5-10 years, similar to what we saw with China maybe five years ago,” says Petur. “We intend to be present there from the beginning and to take part in shaping the development of the industry.” Marel will be building on the track record that it already has in India, having focused primarily on freezers for the shrimp and fish industries with good results.

North American operation expanded

Marel is also solidifying its presence in key established markets. “As far as North America is concerned, we now have a tremendously strong operation in the U.S. with specialised teams focusing on each of the four industries we serve,” explains Petur. “Until now, they’ve been serving the U.S. and Canada but now we‘re expanding to include Mexico. We established an office there that is an integral part of our North American operation.”

In the area of service, the “One Number” campaign in the U.S. and Canada represented an important step on the road towards completely integrated service for all customers in the region.

Another thing that Marel is doing to strengthen the sales and service network is to devote more resources to systematic training. With the integration of the company, sales and service representatives are now responsible for an expanded portfolio of products and are expected to devote several weeks each year to training.

Network of agents delivers

In addition its own sales and service offices, Marel’s network of more than 100 agents around the world has delivered excellent results this year. “We‘re devoting more attention to our agents, many of whom specialise in particular product groups or industries. We’re providing them with even more support than we have in the past, and it‘s resulted in big sales in places like South Korea, Ukraine and Argentina.”

Summing up, Petur says that the results this year show what an attractive industry the food industry is. “Processors can only delay their investments for so long. We’ve seen virtually all our markets bounce back, and even faster than we expected.”

Taking the worry out of service

Marel's approach to service can best be described in terms of two concepts: "think global, act local" and "big enough to cope, small enough to care". This means that we constantly seek to ensure that our systems perform at an optimal level and meet our customers' needs, each and every day.

Global presence

Marel’s global distribution network includes offices and subsidiaries in some 30 countries, and approximately 100 agents and distributors around the world. Building on their knowledge of the market and customer needs, our local teams sell, market, distribute, install and service Marel’s standard products. Large-scale projects, on the other hand, are generally managed by the Industry Centres for fish, meat, poultry and further processing.

“Brazil is the breadbasket of the future and it‘s crucial to establish a strong foundation there for what is to come.”

Petur Gudjonsson
Managing Director of Marel‘s International Sales and Service Network

Innovation

Sustainability by design

“Besides fulfilling a basic need, food has become an emotional issue,” says Chief Technological Officer Jos van de Nieuwelaar, who takes a broad view of the role that food plays in our day-to-day lives. “What consumers in Western Europe and the United States, for example, are satisfying with food is often an emotional need. It can be related to health, pleasure, ease or convenience, price, responsible behaviour or any number of things.

“For many end products, the relationship to the raw material that they originate from has become so distant. So our customers have to operate in the context of these emotions, which are changing faster than they used to. It is our job to develop machines and systems that help them to satisfy these changing needs. Or, better still, to anticipate tomorrow’s requirements.”

Creativity and speed

Jos is convinced that Marel is better placed than ever to rise to that challenge. It’s a challenge that demands creativity and close collaboration with the customer, who sets the final aim of a project, although how the contours will be fleshed out often remains to be defined. “You have to have a true partnership with the customer in order to arrive at the best possible solution,” explains Jos. “And you have to be able to act very quickly and take risks. Having a flexible organisation allows us to arrive at the perfect customer-specific solution.”

Sustainability and social responsibility

The pace of change is increasing in all facets of life and the food industry is no exception. Ever changing consumer habits pose a steady stream of challenges to processors, which Marel helps meet through constant innovation. But there is a growing awareness that technological advances also have to be approached responsibly and in keeping with today’s pursuit of sustainability.

“Issues such as water and energy consumption and the responsible use of raw materials are becoming ever more important. Our AeroScalder, to be launched in 2012, is the clearest example of how we are promoting sustainability in the design of our equipment. But the development of our in-line systems – for poultry processing, pinboning of fish and deboning of pork, to name some examples – is also substantially lowering the C02 footprint of our food by lowering energy and water usage, while at the same time increasing yield and quality.”

Avoid waste, add value

Reducing waste is also a priority. The more use that is made of every fish or bird, the better. In the past, in a poultry market primarily focused on harvesting chicken breasts, a substantial percentage of the rest of the bird was quite simply thrown away. “Now we offer smart solutions that help our customers to market new end products, which fit in well with the pursuit of sustainability and which are commercially interesting. Every day we are working to add still more value to raw materials and by-products.”

In its latest sustainability report, the OSI Group, a leading global food processing company, cites its use of the RevoPortioner from Marel as an example of how the company is taking advantage of innovative new technologies to reduce energy use and waste, thereby minimising the environmental impact of its operations.

View OSI's sustainability report (PDF)

Vision and teamwork

Innovation does not always happen along a straight line. It’s a process that requires vision, leadership, focus and the ability to learn as you go along. And it requires close collaboration. Whereas products were previously assembled from inputs from various disciplines within Marel, today a single solution is developed on the basis of a common vision.

Jos puts it like this: “With the people we now have on board and the type of people we will be looking for in the years to come, we are building up the strengths we need for the future. We are working in a highly dynamic organisation in a highly dynamic marketplace. Teamwork and co-operation is what generates the right products for our customers. It can’t be done any other way.”

At the core of Marel’s strong culture of innovation is a team of over 400 engineers and food scientists, supported by an annual investment of 5-7% of revenues in research and product development.

Patents and trademarks

Patent protection is vital to Marel. In 2011, the company applied for 10 new patents. The current patent portfolio consists of 281 granted patent families.

Sustainability is increasingly a key criteria in the design and production of Marel’s products. Marel’s equipment is built to the highest quality standards and is built to last. It is designed to be energy efficient and to help customers reduce their reliance on scarce resources like water.

“Issues such as water and energy consumption and the responsible use of raw materials are becoming ever more important.”

Jos van de Nieuwelaar
Chief Technological Officer

Spotlight

Innovation in poultry processing

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Innovation in fish processing

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Innovation in meat processing

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Innovation in further processing

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Innovation in process management

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Poultry
Processing
Fish
Processing
Meat
Processing
Further
Processing
Process
Management
INNOVATION IN POULTRY PROCESSING

The AeroScalder:
Conserving scarce resources

The innovative AeroScalder is an example of how Marel promotes sustainability in its product design.

The AeroScalder uses conditioned air for scalding, thereby reducing the reliance on water – an increasingly scarce resource globally – by as much as 75%. In addition, it uses 50% less energy than traditional scalders.

To go with its environmentally friendly design, the AeroScalder helps customers reduce costs and improve the quality of their products.

INNOVATION IN FISH PROCESSING

THE MS 2730:
Next-generation salmon filleting

The MS 2730 takes salmon filleting to a new level in terms of automation, yield and throughput.

The machine has a capacity of 25 fish per minute and ensures optimal yield in two ways:

  • Settings are automatically adjusted to accommodate a variety of fish sizes, between 2-8 kg.
  • A set of new circular knives cuts the fish from gut to tail, ensuring that the meat close to the centre bone is included in the fillets.

With the addition of the MS 2730 to its arsenal, Marel can now offer customers a complete salmon processing line that is fully optimised – from filleting all the way through to production of value-added products.

INNOVATION IN MEAT PROCESSING

Trim management system:
Hits the target every time

For processors, knowing the accurate fat percentage of incoming raw material is valuable. But controlling what actually comes out of their production process provides them with even more added value.

Marel’s new trim management system analyses the fat/ lean ratio of meat using the X-ray technology of the SensorX, previously used so successfully to detect bones in poultry. The SensorX scans for density variations in the product and can detect hazardous contaminants, as well as accurately classify the lean content of the meat trim.

Accurate trim management is especially important for producers of sausages and burgers, who have to fulfill contractual and legal obligations regarding lean content.

Innovation in further processing

The ModularOven:
The power of two towers

The ModularOven is the largest oven system in the Townsend Further Processing product range, capable of steaming, cooking and roasting a wide variety of products.

The oven features highly advanced heating technology, including two separate towers with completely distinct cooking environments, providing maximum yield and capacity.

The combination of two towers increases the ModularOven’s capacity and versatility. The first tower may be used for high dew point steaming, for example, followed by high temperature, low dew point cooking in the second tower.

Innovation in process management

Innova:
Monitor, measure, maximise

It has become ever more vital for food processors to have the ability to control, measure and monitor their production processes. Innova, Marel’s production management software suite, does just that.

Innova tracks and controls key performance indicators (KPIs) – such as yield, throughput and quality – in real-time, from reception of raw material all the way through to dispatch of the final product.

n addition to optimising performance, Innova ensures full traceability of the raw material all the way back to its origin, provides a top-of-the-line quality control system, and offers advanced inventory and order processing capabilities.

Innova ties it all together.

OPERATIONAL EXCELLENCE

Continuous learning and improvement

Effective management requires a holistic view of the company’s operations. Value flows horizontally through multiple divisions and disciplines within a company before it reaches the customer. Therefore, when seeking to improve processes, the key to success is to look at the company’s total value stream. Only by taking a step back and surveying the complete picture can we make real improvements that benefit our customers.

That is why Marel strives for continuous learning, improvement and development across the whole range of our activities. We firmly believe that only by doing so can we truly create value for all our stakeholders – customers, shareholders and employees alike.

In the past year, we have continued to maintain a strict focus on rationalization, cost control and reducing waste, while at the same time seeking to shorten lead times, improve quality and decrease the total cost of our products and services for our customers. Great effort continues to be invested in ensuring that the company’s reduced cost base is sustainable despite the growth in activity.

Manufacturing

“The Marel manufacturing organization has adopted a strong vision for the future, of a dynamic manufacturing process defined by three key factors – speed, flexibility and innovation,” says Fred Vijverstra, Global Manufacturing Director. “All 16 of our manufacturing sites around the world have been aligned under this common vision.”

Continuous improvement is the driver for success in fulfilling this vision. “Through incremental improvements and lean initiatives, we are removing waste in order to increase speed and agility in the manufacturing process – from parts production and assembly to quality control, logistics and procurement. This will lead to the lowest total cost for the company,” explains Fred.

To promote a holistic approach, best practices are now combined in one common Marel Manufacturing System. In addition, a key focus is now placed on strengthening the core competences that are strategically important to supporting Marel´s value proposition.

“Now that we have one common vision and approach in place, the focus in the coming year will be on harvesting the synergies to the fullest, as well as on growing the manufacturing operation to match the needs of the market.”

Procurement and working capital

In the procurement area, projects are in process aimed at taking better advantage of economies of scale. The main focus in 2011 was on 1) standardising the parts used across the company, 2) selecting suppliers who are a good fit with Marel’s strategy and 3) on leveraging spend. Moreover, emphasis continues to be placed on improving working capital parameters, such as Inventory Turn and Days Sales Outstanding.

“Through incremental improvements and lean initiatives, we are removing waste in order to increase speed and agility.”

Fred Vijverstra
Global Manufacturing Director

OUR PEOPLE

“The major milestone for me was the completion of the integration of all our business units into one company at the end of 2010,” says Hrund Rudolfsdottir, Corporate Director of Human Resources. “In 2011, we focused heavily on following that process through, on shaping a unified global team that marches together along the same path.”

In 2010, the company launched a campaign under the banner of ‘Marel on the move’ that included a series of integration meetings at the company’s key locations around the world where the future vision, values and structure of the ‘new’ Marel were defined. In 2011, promotion of the set of values adopted during this process was a key priority for HR.

Success grounded in values

“We all recognise that in order to be successful, we need to be grounded in a set of strong and recognisable values that can guide our decisions in the future. Each of our locations put a tremendous amount of effort this year into analysing what these values mean, why we consider them to be important and how we apply them in a practical sense to our daily work,” Hrund explains.

Diversity, one of the eight Marel values, was a particular focus area for HR in 2011. “We’ve been working with three dimensions of diversity – culture, team composition and gender. We are not all alike and that’s a good thing. In a company like ours that thrives on innovation, we need a diversity of talents and points of view in order to constantly generate new ideas.”

Spotting future talent

The new HR tools and processes implemented in 2011, including a new global appraisal system, all support the ‘one company’ approach.

“Undoubtedly, one of the highlights of the year in this regard was our new Management Leadership Programme, aimed at spotting and developing future talent. These are the people who will be stepping into leadership roles in the next 5-10 years,” says Hrund. “We’re half-way through the first year-long programme and so far the results are very promising. It’s a programme that goes hand-in-hand with our regular assessments of the composition of our management team.”

Growth in numbers

With the increasing activity and constant growth in the order book, the number of employees continued to steadily increase during the course of 2011 (Q1–3,570; Q2–3,754; Q3–3,834; Q4–3,919). The largest number of employees is located in the Netherlands, followed by the U.S., Iceland, Denmark and the U.K. Just over 70% of employees are located in Europe.

“In a company like ours that thrives on innovation, we need a diversity of talents and points of view.”

Hrund Rudolfsdottir
Corporate Director of Human Resources

Number of employees (FTEs),
average per year

Number of employees by geographical location at the end of year 2011

Marel's values

Commitment

Diversity

learning and Excellence

Humor and Fun

Partnership with Customers

Teamwork

Open Communication

Success

Marel reserves the right to modify this web edition of its Annual Report at its own discretion until the printed version is published and made available for download on this website. In case of any discrepancies between the web and printed versions, the latter shall prevail and be considered to be the final version of the report.

Copyright © 2011 Marel. All rights reserved

Consolidated financial
statements for 2011

The consolidated financial statements for 2011 are available as a downloadable and printable pdf document, as well as in a web-based, interactive format online.

Disclaimer:

For the sake of convenience, the income statement, balance sheet and cash flow statement from the Consolidated Financial Statements for 2011 are also provided in downloadable Excel format. Please note that these are unofficial versions; the PDF document is considered to be the official version of the Consolidated Financial Statements.