Full year 2013: Operating results below potential – Strong cash flow
All amounts in EUR:
- Revenues for 2013 totaled 661.5 million (m), a decrease of 7.3% compared with the year before [2012: 714.0m].
- EBITDA was 69.4m or 10.5% of revenues compared with 86.0m in 2012.
- Operating profit was 42.9m or 6.5% of revenues compared with 61.1m in 2012.
- Net result for 2013 was 20.6m compared with 35.6m in 2012. Earnings per share were 2.81 euro cents [2012: 4.88 euro cents].
- Cash flow from operating activities before interest and tax was 80.3m in 2013 compared with 65.6m in 2012 and net interest bearing debt is 217.1m at the end of 2013 [2012: 243.2m].
- The order book was at 132.4m at the end of the year [2012: 125.4m].
Revenues were 662 million with 43 million in EBIT in 2013. Revenues declined by 7% compared with previous year. Revenues from large projects were at a low level while recurring spare parts and service revenues continued to increase.
Management guidance is to reach organic revenue growth with 55 million adjusted EBIT in 2014. The long term outlook in the industry remains favorable and Marel’s goal is to continue to grow faster than market.
A refocusing plan has been launched where the organizational structure will be simplified in order to service customers better. Business units serving the same customer needs and that rely on the same technical capabilities will be combined.
Simultaneously the primary focus has been changed from volume to value creation, with targeted operating profit (EBIT) exceeding 100 million in 2017.
Q4 2013 results: Strong cash flow– Low profit margin
All amounts in EUR:
- Revenues for Q4 2013 totaled 168.2m, a decrease of 5.7% compared with revenues for the same period the year before [Q4 2012: 178.4m].
- EBITDA was 14.1m, or 8.4% of revenues [Q4 2012: 19.5m].
- Operating profit (EBIT) was 7.4m, or 4.4% of revenues [Q4 2012: 13.6m].
- Net result was 3.7m for Q4 2013 [Q4 2012: 7.1m].
- Operating cash flow before interest and tax is exceptionally strong at 34.7m for Q4 compared with 28.6m in Q4 2012.
The EBIT margin in fourth quarter 2013 is low. The reasons for this are mainly cost associated with management changes (2m) and adjustment of inventories (2.9m). Cash flow from operating activities is exceptionally strong.
Orders received amounted to 162.4m in Q4 2013 compared with 152.3m in Q4 2012. The order book stood at 132.4m at the end of Q4 2013 compared with 125.4m at the end of Q4 2012.
Árni Oddur Thórdarson, CEO:
“Marel´s market position is strong on all continents as a leading provider of advanced solutions for poultry, meat and fish processors. Marel reached 4% average annual growth during the last 5 years.
“At the same time global economic growth has been historically low. This has been a difficult period for food processors that have seen a spike in corn and energy prices. The situation is improving and overall food processors returned healthy profits in 2013 which enabled them to strengthen their financials.
“There is now a clear need for expansion and modernization. Marel delivered 43 million operating profit last year which is not in line with potential. Following recent management changes we have taken several initiatives to simplify our structure and drive down fixed cost.
“A good example is the changes already made in Marel´s meat activities. Three business units in Marel´s operational structure were merged to better utilize existing innovation and sales capabilities. Among those units are Carnitech activities that were acquired last year.
“The organizational structure will be further simplified in order to service customers better. We will take careful steps to combine business units that serve the same customer needs and rely on the same technical capabilities.
“Our manufacturing footprint is extensive and spread causing over- and under-utilization in the system. We have formally started our refocusing plan with the objective of becoming simpler, smarter and faster. Our aim is to reach over 100 million in operating profits in 2017.”
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.