Executive Summary

• Outlook in 2024 for low single digit organic revenue growth and improved operational performance to 10-11% EBIT, weaker operational performance expected in 1Q24 due to soft order book
• Medium-term financial targets of revenue growth outperforming market growth, 14%+ EBIT, 18%+ EBITDA
• Strong cash conversion in the quarter driven by favorable movements in working capital, leverage below 3.5x at year-end, good covenant headroom and liquidity going into 2024
• Solid orders received of EUR 466.4m in 4Q23, showing underlying improvement
• Aftermarket revenues reach annual run rate of EUR 800m at EUR 200.5m in the quarter
• EBIT of 9.6% in 4Q, improving QoQ with robust performance from Plant, Pet & Feed segment, solid margins for Poultry while continued weakness in margins for Meat and Fish

Financial highlights Q4 2023

• Orders received: EUR 466.4m (3Q23: 390.8m, 4Q22: 413.4m).
• Revenues: EUR 448.0m (3Q23: 403.6m, 4Q22: 489.2m).
• EBITDA[1] margin: 13.1% (3Q23: 12.9%, 4Q22: 15.9%).
• EBIT[1] margin: 9.6% (3Q23: 9.0%, 4Q22: 12.4%).
• Net result: EUR 8.7m (3Q23: 10.1m, 4Q22: 18.5m).
• Cash flow from operating activities before interest and tax: EUR 102.0m (3Q23: 62.4m, 4Q22: 44.3m).
• Free cash flow: EUR 83.4m (3Q23: 32.4m, 4Q22: 10.0m).

Financial highlights FY2023

• Orders received: EUR 1,626.3m (2022: 1,734.0m).
• Order book: EUR 580.1m (2022: 675.2m).
• Revenues: EUR 1,721.4m (2022: 1,708.7m).
• EBITDA[1] margin: 12.6% (2022: 13.0%).
• EBIT[1] margin: 8.9% (2022: 9.6%).
• Net result: EUR 31.0m (2022: 58.7m).
• Basic earnings per share (EPS): EUR 4.11 cents (2022: 7.78)
• Cash flow from operating activities before interest and tax: EUR 225.8m (2022: 96.4m).
• Free cash flow: EUR 109.4m (2022: -18.1m).
• Leverage[2]: 3.45x (2022: 3.42x).
• The Board of Directors will propose to the 2024 Annual General Meeting that EUR 0.82 cents dividend per outstanding share will be paid for the operational year 2023, corresponding to approximately 20% of net results in line with the dividend policy.

Arni Sigurdsson, CEO:

„I am pleased to report our results for the first time as CEO of Marel. While 2023 has been a year with challenges, team Marel has shown dedication and focus in driving improved results which are starting to come through, particularly in our cash performance and orders received. We still need to do better on profitability and this is a key focus as we look ahead.

In late 2023 we announced that we had received takeover proposals from JBT, and this January we have entered into further discussions and reciprocal due diligence. It is too early to update on this process today, but we are focused on delivering for our customers, employees and shareholders as this continues. What is clear however, is nothing will change for some time and it remains business as usual at Marel.

As we look ahead, the year will see growth, albeit with a soft first quarter. We are confident we will build on this and the first step I undertook as CEO was to stress-test our targets, ascertain what we can deliver and to develop a roadmap to do this. Reflecting this process, we have today set out deliverable medium-term targets which will see a step up in financial and operational performance with us returning to outperforming our markets and delivering on our significant underlying potential. I would like to thank all our team for their hard work to support our customers transform the way food is processed“

Financial targets reset and updated outlook for the medium term
Following a review of the business plan, management is presenting the outlook for 2024 and the mid-term based on the challenging macro environment, the business cycle within the food industry, and uncertainty on timing of recovery. Long-term average market growth is unchanged and expected at 4-6% annually.

Revenue decline and weaker operational performance is expected in 1Q24 based on the soft order book, representing 34% of trailing twelve-month revenues, and low level of projects orders received in previous quarters. Orders received and revenues expected to build up throughout the year, resulting in low single digit organic revenue growth for FY24 and improvement in operational performance to 10-11% EBIT[1] margin.

In the mid-term, there are positive signs of improvement in both market outlook and customer sentiment. To deliver strong revenue growth and improved operational performance in the future, build up of the order book to a healthy level is needed. Mid-term outlook for revenues is expected to be above market growth (4-6% annually) with EBITDA[1] margin above 18% and EBIT[1] margin above 14%.

Other considerations include the continued improvement of working capital, full focus on cash and EBITDA generation to reach targeted capital structure of 2-3x net debt/EBITDA, and CAPEX[3] to be at normalized levels of 2-3% after a period of elevated investments.

Assumptions include long-term average market growth of 4-6% annually, no material escalation of geopolitics or disruption in supply chain and logistics, and effective tax rate of ~20%. Growth is not expected to be linear but based on opportunities and economic fluctuations, operational results may vary from quarter to quarter.

Dividend proposal EUR 0.82 cents per share or 20% of net result
The Board of Directors will propose to the 2024 Annual General Meeting that EUR 0.82 cents dividend per outstanding share will be paid for the operational year 2023, corresponding to approximately 20% of net results in line with the dividend policy.

The estimated total dividend payment will be around EUR 6.2m, compared to EUR 11.7m in the prior year, with a payment date on 11 April 2024 (ex-date 22 March and record date 25 March).

Investor meeting and live broadcast
On Thursday 8 February 2024, at 9:30 am CET (8:30 am GMT), Marel will host an investor meeting where CEO Arni Sigurdsson and CFO Stacey Katz will give an overview of the financial results and operational highlights in the fourth quarter and for the full year.

The investor meeting will be held at the company’s headquarters in Austurhraun 9, Gardabaer, Iceland. Breakfast will be served from 8:00 am GMT.

Please register for the webcast here. The meeting will be streamed live via Zoom and a recording will be made available after the meeting on marel.com/ir.

Financial calendar
AGM – 20 March 2024
Q1 2024 – 29 April 2024
Q2 2024 – 24 July 2024
Q3 2024 – 30 October 2024
Q4 2024 – 12 February 2025

[1] Result from operations and EBITDA adjusted for PPA related costs, including depreciation and amortization, acquisition related expenses and restructuring costs. In Q4 2023, result from operations is also adjusted for one-off write-offs related to product portfolio rationalization.
[2] Net debt (excluding lease liabilities) / Pro forma LTM adjusted EBITDA (including recent acquisitions) excluding non-cash and one-off costs per Marel's credit agreements
[3] Capital expenditures excluding investments in R&D and right of use assets.