ROBUST PERFORMANCE BY MAREL
Robust performance by Marel in second quarter despite challenges – Despite the challenges of coronavirus, fish processing equipment manufacturer Marel put in a robust performance in the second quarter of 2020.
Arni Oddur Thordarson, CEO, said: “The first half of 2020 has truly been a testament to the resilience of our business model and that of our team. I am proud to say that despite the many challenges encountered, our culture of excellence and decentralized leadership model have been key to maintaining our reputation as a trusted service partner to our customers. Together, our extraordinary team here at Marel, our customers and suppliers, have ensured that one of the most important value chains in the world – the food value chain – continues to run efficiently. For this, I am extremely proud and thankful to be part of this great team.
“While ensuring the safety of our employees and our customers, we have focused on finding smarter ways to deliver solutions and services at the right quality and at the right time. Indeed, all of our factories worldwide have remained open, albeit operating at below historical and targeted utilization rates
“We saw improved results in the second quarter with revenues of EUR 306 million and close to 15% EBIT. Gross profits are hampered by lower volume but benefit from a good product mix and project execution. The lower gross profit is compensated by unusually low operating expenses that is both due to less travel and tradeshow activities which are replaced with remote connection and virtual show rooms.
“In addition, the ongoing streamlining efforts have started to count towards sustained lower cost base. Our global reach with a local presence, with over 2,500 sales and service employees in 30 countries serving customers in 140 countries, is a key differentiating factor in times like these. The proportion of recurring aftermarket revenues was around 38% in the quarter.
“Orders received in the first half of 2020 were on par with same period last year, with record orders received in first quarter and lower in the second quarter during the peak of the pandemic. Revenues were EUR 607 million, down 7%, with an EBIT margin close to 12%. Cash flow was robust and leverage remains low at x0.6 of EBITDA. In the last six months, we have returned around EUR 94 million to shareholders in the form of dividends and share buybacks and have the financial capacity for continued investment into our platform and strategic growth.
“Opportunities for automation and the digital transformation in the food industry are immense, and the speed of change is accelerating. Consumer behavior is changing with long-term consequences. Over past 4-6 months, we have seen a dynamic shift in demand from foodservice to groceries, with more mindful shopping, both in terms of price as well as awareness of a healthy, more sustainable diet. Rather than bulk up once a week with frozen and packaged foods, consumers are again looking for fresh and ready-to-cook products.
“Our customers, that have the channel flexibility and processing know-how to chase different consumer products in the market, have performed well in these turbulent times – so has Marel. While continued fluctuations in operational performance between quarters can be expected, we reiterate our mid- and long-term targets.”
Financial highlights Q2 2020
- Orders received were EUR 280.1m (2Q19: 311.2m).
- The order book was EUR 439.0m (1Q20: 464.6m, 2Q19: 459.4m).
- Revenues were EUR 305.7m (2Q19: 326.5m).
- EBIT* was EUR 45.0m (2Q19: 49.6m), translating to an EBIT* margin of 14.7% (2Q19: 15.2%).
- Non-recurring and not adjusted for cost associated with strategic streamlining in the quarter is around EUR 1m. Streamlining will come into full effect in 2021 with cost savings achieved during the quarter of EUR 2m on an annual basis.
- Net result was EUR 30.7m (2Q19: 34.3m).
- Basic earnings per share (EPS) were EUR 4.07 cents (2Q19: 5.16 cents).
- Cash flow from operating activities before interest and tax in the quarter was EUR 63.1m (2Q19: 22.3m). Free cash flow at EUR 47.6m (2Q19: -1.7m).
- Net debt/EBITDA was x0.6 at end of June (1Q20: x0.4). Targeted capital structure is x2-3 net debt/EBITDA.
- Marel repaid EUR 500m on syndicated revolving credit facility, after drawing EUR 600m in 1Q20