Revenues in Q1 amounted to €158.0 mill. reflecting the low level of the order book at the start of the year, according to the latest presentation of Marel's results at an investor meeting.
The EBIT margin of 6.5% is below the long-term target of 10 to 12%. However, the size of the order book grew by 20% during the quarter which supports the expectation of higher revenues and profitability in the second half of the year. Important sales were made in markets such as Brazil, China, Middle East and Russia. Europe remains challenging while USA shows signs of recovery.
After a downwards trend in recent quarters, Q1 saw strong growth in orders received, which amounted to €183.7 mill. or similar as in Q1 2012 (€185.4 mill.). This is an increase of 20% compared to last quarter (€152.3 mill.). Orders received exceeded orders booked off resulting in an order book of €151.1 mill. at the end of the quarter compared with €125.4 mill. at the end of last year. Poultry
During the first quarter the order intake increased considerably compared to the 4th quarter of 2012, including several substantial orders mainly from Russia, Middle East, China and Brazil. At the Agrame exhibition in Dubai, Marel Stork received another innovation award for the AeroScalder. The new IRIS (Intelligent reporting, inspection & selection) solution was successfully released next to a unique EU water bath stunner complying with the recent implemented regulations on stunning of poultry.
The final inspection machine RotoVac-20 RS is installed in a number of plants already and based on results it is concluded that it provides a great improvement for the deboning process due to the strong reduction of carcass damage.
Since the IPPE exhibition in Atlanta in January, there have been substantial sales of the StreamLine poultry concept and a major order for 8" eviscerating lines for heavy broilers.
In general, markets in Europe tend to be more positive for our customers in the coming quarter when spring season arrives with different eating patterns of consumers (e.g. more barbecue). Overall, revenues are expected to be back on track in the 2nd quarter.Meat
Q1 started slowly for Marel's meat segment, mainly due to continued market and economic uncertainty. Nevertheless, the pipeline of projects is growing steadily. It is expected that these projects will be realized within the coming months.
Noticeably, Marel recognizes increased activity in Europe and US, which is already an improvement from 2012. Good orders were closed in the first quarter in Ireland for the newly launched Trim Management Systems, and of particular notice is a large order from Japan for numerous portioning machines.
The IFFA exhibition, held every three years, will take place in May where Marel will be launching new developments, amongst other Deboflex - a revolutionary concept for deboning pork fore-ends, and ProTen, a completely new solution for meat recovery.Operational excellence - Cost efficiency
Marel has taken many important steps in recent years in order to align the company's resources, and to become more efficient in processes throughout the company's operations. However, keeping the cost base at an optimal level has been a challenge in recent quarters. Therefore, Marel will continue to maintain a strict focus on operational efficiency and cost control.
At the same time it is clear that the company's overall cost base is geared towards capturing increased sales and market share in the near term.Cash flow
Operational cash flow before interest and tax remains healthy at €17.2 mill. increasing by €3.7 mill. compared to the first quarter of last year (Q1 2012; €13.5 mill.). The operational working capital is at slightly lower level and in line with the company's growth plans.Finance
The balance sheet is strong and net interest bearing debt amounted to €239.3 mill. at the end of Q1 2013, compared with €254.2 mill. at the end of Q1 2012. Marel is financed in EUR and USD in a proportion giving a natural hedge to exposures.Outlook
Marel expects moderate growth in 2013, assuming recovery in established markets in the second half of the year. With increased sales of standard solutions and focus on operational excellence the company expects to be back on track with 10 to 12% EBIT margin in the second half of 2013.
Mid- and long-term, the company believes that the innovative products and global presence in all industries will stimulate strong growth and increased profitability.