Financials

Marel closed the year with a record quarter of EUR 400.7 million in orders received, or a total of EUR 1,502.0 million for the full year, which is an increase of 22% compared to 2020. The industry mix was good, with a higher proportion of standard solutions for the consumer-ready food market and continued good momentum in services and software.  

Demand for Marel solutions, software and services is strong as the need for automation and digitalization in food processing is accelerating. Labor availability, a dynamic shift in consumer behavior and the request for agility to match consumer demand, as well as an increased focus from consumers and regulators on sustainability in food production, are driving forces to further transform the industry. Marel’s competitive position remains strong with continuous high conversion of pipeline into order book, while gradually capturing market share. 

M&A continues to stimulate organic growth and accelerate the innovation roadmap. Throughout the year, Marel secured important orders where a broader product portfolio following recent acquisitions were key. 

The order book at year-end was EUR 569.0 million, up 36.9% compared to EUR 415.7 million at year-end 2020, representing 41.8% of 12-month trailing revenues.  

The book-to-bill ratio was 1.10 for the full year, compared to an average of 1.06 in the past four quarters (4Q20-3Q21) and 1.00 at year-end 2020. 

Revenues for the full year were EUR 1,360.8 million, up by 9.9% while the adjusted EBIT remained soft at 11.3%. Organic revenue growth was 4.4% and acquired growth 5.5% in 2021. 

Aftermarket, consisting of services and spare parts, represented 40% of total revenues in 2021 (2020: 40%). Spare parts were at a record level for two sequential quarters, and there is full focus on strengthening the spare parts delivery model and shortening lead times. 

Looking at the healthy order book and strong pipeline gives us confidence to reconfirm our mid-term year-end 2023 targets of 40% gross profit, compared to 36.6% in 2021, which was impacted by supply chain and logistics challenges, as well as strategic projects with the aim of increasing speed and scale.  

The main drivers to reach our targets are increased volume, better mix, value-based pricing, and streamlining of the customer journey focusing on automating and synergizing the back-end. We have also undertaken transformational initiatives in 2021; especially worth noting are our investments in order fulfillment and distribution systems for spare parts to secure quicker response and delivery times around the globe.  

We have courageously moved forward in the middle of the pandemic and stepped up sales and service coverage around the globe ahead of the foreseen growth curve. Sales and marketing (S&M) costs were at a level of 12.5% of revenues in 2021 (2020: 11.4%) and reflect the step up in market coverage in line with plans to leverage global reach and digital solutions to drive organic growth, which has started to translate into increased orders. Travel for customer visits and exhibitions on the rise as restrictions are lifted, focus on maintaining cost efficiencies from new ways of working, but we are expecting high customer activity and orders in the coming period. 

General administrative (G&A) costs were 6.9% of revenues in 2021 (2020: 6.9%), with important transformative initiatives ongoing. For example, a new shared services platform was launched in October, which was one of several ongoing initiatives for standardization and aligned ways of working to support our mid-term year-end 2023 targets aimed to lower G&A costs. 

We expect the momentum for orders received to continue and higher revenues will provide better cost coverage, moving sales and administration costs toward the targeted 18% level by year-end 2023, from the current level of 19.4% in 2021. The innovation performance and costs are close to the 6% strategic levels. 

For the full year, adjusted EBIT was EUR 153.6 million (2020: 166.8 million), translating to an adjusted EBIT margin of 11.3% (2020: 13.5%). To increase transparency of one-off costs related to acquisitions and better reflect underlying business performance, Marel’s operating income is adjusted for PPA related costs, including depreciation and amortization, and acquisition related costs.  

Margins in 2021 were colored by step-up in market coverage and infrastructure initiatives to increase speed and agility for the expected growth curve resulting in higher operating expenses, in addition to margin pressure from supply chain and logistics challenges. 

However, the strong orders received across all industries and processing stages are expected to increase volume with foreseen more favorable industry mix, resulting in higher operating profits. 

Management continues to target medium- and long-term adjusted EBIT margin expansion for Marel Meat and Marel Fish. 

Cash flow, both operational and free cash flow remained strong in 2021, enabling continued significant investments in innovation, infrastructure, and strategic inventory buildup.  

Free cash flow amounted to EUR 116.0 million, compared to EUR 140.5 million in 2020. Working capital development was positive despite a strategic buildup of inventories to meet customer demand for critical spare parts and to ensure timely delivery.  

EUR 41.0 million was paid in dividends in April 2021 for the operational year 2020.  

The strong financial position enables continued investment and will facilitate future strategic moves in the ongoing industry consolidation wave, in line with the company’s 2017-2026 growth strategy. 

Leverage including lease liabilities was 1.0x at year-end 2021, compared to 1.0x at the end of 2020. Marel’s current leverage is well below the targeted capital structure of 2-3x net debt/EBITDA. Coupled with Marel’s financial strength, this enables continued investment and will facilitate future strategic moves in line with the company’s 2017-2026 growth strategy.  

Marel has committed liquidity of EUR 666.5 million at year-end 2021 and fully committed all-senior funding in place until 2025.  

To best serve customer needs and capture growth opportunities from changing market dynamics, cash capital expenditures excluding research and development (R&D) investments are expected to increase to on average 4-5% of revenues over the next four years, thereafter returning back to more normalized levels.  

Important transformative initiatives ongoing, for example stepping up market coverage in growth markets, innovation investments in digital solutions, improvement projects to streamline the back-end, as well as automating and digitalizing the manufacturing platform, supply chain, and aftermarket.  

In 2021, Marel opened new demo center facilities in Campinas, Brazil and Shanghai, China—Marel’s first in both Latin America and China. The facilities cement Marel’s commitment to the growing markets and signal intent to work even more closely and efficiently to support the customers, partners, and the broader food processing industry in key regions. 

Marel is a trusted maintenance partner and a key focus going forward is on automating and digitalizing the end-to-end spare parts handling to ensure agility and shorter lead times. Spare parts sales were at a record level for two sequential quarters, 3Q21 and 4Q21. 

In line with Marel’s targeted capital allocation and dividend policy of 20-40% payout ratio, the Board of Directors will propose a 40% payout ratio at the 2021 Annual General Meeting, to be held on 16 March 2022 (2021: 40%). Based on a EUR 5.12 cents dividend per outstanding share paid for the operational year 2021, the estimated total dividend payment will be around EUR 38.7 million. This is a 6% decrease in dividend per share compared with the previous year.

Marel Poultry’s competitive position remains strong on the back of its established full-line offering. With one of the largest installed bases worldwide, Marel Poultry focuses on rollout of innovative products and market penetration through cross-selling of secondary and further processing solutions. The acquisition of Poultry Machinery Joosten (PMJ) in January 2021 has been fueling organic growth in terms of new sales into the duck market.

Orders have been strong for three sequential quarters after a soft start to the year 2021. Pipeline remains strong, supporting stronger volume going forward with a favorable product mix. Profitability impacted by volatility in volume and scaling up ahead of the growth curve.  

Revenues in 2021 were EUR 639.1 million, a similar level as previous year, despite softness in orders for larger projects in the beginning of 2021. Adjusted EBIT margin for the full year was 14.3%, compared to 18.3% in 2020.  

Marel Meat is a full-line supplier to the meat processing industry, with a focus on strong product development, increased standardization, modularization, and market penetration and further cross-selling and upselling.

Overall, orders received for Marel Meat were at a strong level at year-end 2021. The need for automation and channel flexibility has never been clearer and the pipeline shows good opportunities in China and North America.  

Revenues in 2021 were up 22.3% on the back of acquisitions and organic growth. Adjusted EBIT margin in 2021 was 9.2%, compared to 8.7% in 2020. Focus in 2021 was on stepping up market coverage, further strengthening the management team, value-based pricing, better project execution, and several other strategic initiatives ongoing for profit improvement.

Management continues to target medium- and long-term adjusted EBIT margin expansion for Marel Meat.  

In the mid-term, management is committed to achieving its targets of 40% gross profit and selling, general and administrative expenses (SG&A) of 18%, and to maintaining the innovation investment at the 6% strategic level until year-end 2023. 

Marel’s management expects average annual market growth of 4-6% in the long term. Marel aims to grow organically faster than the market, driven by innovation and growing market penetration.  

Due to catch-up effect from the past five years and a very strong tailwind in the market, accelerated by the pandemic, management believes that market growth in the medium term (2021-2026) will be at a level of 6-8%. 

Maintaining solid operational performance and strong cash flow is expected to support 5-7% revenues growth on average by acquisition.  

Market conditions have been challenging due to geopolitical uncertainty and the ongoing COVID-19 pandemic. Marel enjoys a balanced exposure to global economies and local markets through its global reach, innovative product portfolio, and diversified business mix. Supply chain and logistics challenges are expected to continue to have an impact in 2022, although it is not known what the full economic impact will be on Marel. 

Growth is not expected to be linear but based on opportunities and economic fluctuations. Operational results may vary from quarter to quarter due to general economic developments, fluctuations in orders received and timing of deliveries of larger systems.