Improved profit margins – markets recovering at a slow pace
All amounts in EUR:
- Revenues for Q3 2013 totalled 156.9 million (m), a decrease of 4.5% compared to the same quarter of 2012 [164.3m].
- EBITDA was 19.5m or 12.4% of revenues [Q3 2012: 20.5m].
- Operating profit (EBIT) was 12.9 or 8.2% of revenues [Q3 2012: 14.1m].
- Net result for Q3 2013 was 6.0 [Q3 2012: 8.4m]. Earnings per share were 0.81 euro cents [Q3 2012: 1.15 euro cents].
- Cash flow from operating activities before interest and tax was 3.0m and 45.6 m YTD. [YTD 2012: 37.0m]. Net interest bearing debt was 239.0m at the end of the quarter compared to 261.1m in Q3 2012.
- The order book was at 138.3m at the end of the quarter [Q3 2012: 151.4m] and has increased by 4.9% since the end of last quarter [131.8m].
Revenues for the first nine months of 2013 amounted to 493.4m and show a 7.9% decrease compared to the same period last year. This reflects challenging market situations and slower recovery than originally expected.
Operating profit (EBIT) YTD is 7.2% of revenues which is below the company´s target (10-12%) for the full year. Marel expects the EBIT margin in Q4 to be in line with Q3.
Market conditions are still challenging with signals of improvements. While economic recovery seems to be gaining momentum in North-America, the Eurozone is still fragile and signals from emerging markets remain mixed with positive future prospects.
Revenues from service and spare parts increased in Q3, while larger projects continue to be an uphill climb. Improved profit margins this quarter signal progress in operational efficiency and cost control despite delays of large projects.
Full year revenues 2013 are expected to decline by 6-8% compared with previous year. Marel expects moderate growth of revenues next year on the heels of market recovery.
Theo Hoen, CEO:
“Marel is performing on a reasonable level considering market conditions. The turnaround has been slower and more gradual than what we have seen before and had previously expected. Lack of investments in large projects is affecting our revenue base.
“We remain confident that once the market bounces back we will capture increased demand with investment need building up. We saw this happen in 2009 when food processors delayed modernization of their equipment because of the economic uncertainty. Then in 2010 we saw it bounce back as the underlying demand for protein continued to grow as is the case now.
“In the meantime we are utilizing our extensive sales and service network to generate business by increased and better service to our customers. We remain optimistic about the future prospects and that's why we will continue to maintain our network and a good level of investment in R&D while keeping our focus on operational efficiency.”
5% increase in order book
Orders received amounted to 163.3m in the third quarter compared to 159.1m in Q2 2013. The order book amounted to 138.3m at the end of the third quarter compared with 131.8m at the end of Q2 [Q3 2012: 151.4m].
This represents an increase in the order book of around 5% compared with last quarter. This development reflects gradual recovery in Marel’s major markets while capturing that growth in the order book is still somewhat restrained by the absence of large projects.
This reflects the prolonged hesitation to invest in difficult market environment. Investment decisions now take longer than before. This applies to the market in general and Marel believes it is not losing market share.
The company's position in the market is strong and long term outlook for orders received is positive as the protein industry is expected to grow steadily in the coming years and need for investments is building up.
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.