Slower growth with improving profit margins

Slower growth with improving profit margins

Marel expects the revenues growth for the year 2012 to be around 5-6% with revised EBIT margin of around 9%.

Revenues totalled €535.6 mill. for the 9-month period ending 30 September which is an increase of 10.6% compared to the previous year. Marel has grown rapidly in the last few years. The third quarter reflects a slower pace in the world's economy resulting in uncertainty which has caused delays in investment.

Marel has emphasised fluctuations between quarters. For the moment the uncertain market conditions are reflected in the Company's operations. However, the revenue split in third quarter is geographically well balanced with large projects coming in from Canada, Saudi Arabia and Russia.

The near- and long-term outlook remains good with steady growth projected in the protein industry. Therefore, Marel maintains its goal for €1 bill. turnover in 2015.

Operating profit (EBIT) was €47.4 mill. for the first nine months of the year, or 8.9% of revenues, compared to €51.5 mill. normalised for the same period of last year. Operating profit has improved since last quarter and is up to 8.6% from 6.5% in Q2 while falling below the Company's target.

The main reasons are similar as last quarter; there were some extra costs of realising projects and the product mix was rather unfavourable due to market conditions. There was less demand for standalone equipment whereas larger projects have lower margins.

However, larger projects create future demand for standard products and services.
Orders received during third quarter are at the lower end of what Marel has seen in recent past, amounting to €133 mill. The timing of large orders received always impacts the level of the order book which now amounts to €151.4 mill.

Marel's customers are faced with difficult economic conditions coupled with higher feed prices, which has caused delays in investment decisions both in larger projects and standalone equipment as well as in spare parts and services. Manufacturing load is at acceptable level.

The company's position in the market is strong and the near-to long-term outlook for orders received is positive as the protein industry is expected to grow steadily in the coming years.
Source: Marel
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