CHAIRMAN'S STATEMENT

We are proud of the achievements of the Marel team in 2017. It was a great year with strong financial results. Revenues exceeded EUR 1 billion, operating profit margin was above 15% and net profit increased by almost 28% over 2016. Significant investments were made in strengthening Marel’s foundation and important progress achieved towards our growth targets, benefitting both customers and shareholders.

This year, Marel celebrated the 25th anniversary of its listing on NASDAQ Iceland and 2018 will mark the 35th anniversary of its founding. Those of us who have the privilege of being part of Marel today are grateful for the courage and passion of those who paved the way and laid the groundwork for our great company, a leading global provider of advanced food processing systems and services. The unprecedented speed and magnitude of change today demands no less. Courage to challenge convention and explore new directions, spot opportunities and take calculated risks to reach strategic goals. Passion in believing we can accomplish great aspirations, such as transforming the way food is processed, by continuously striving for excellence, doing more with less, being better than yesterday.

Investing in profitable growth

At the 2017 Annual General Meeting, an ambitious growth strategy for the next 10 years was introduced. Marel targets 12% average annual revenue growth, both organic and through acquisitions. Organic growth, driven by innovation and market penetration, is expected to outstrip average market growth, and strategic acquisitions will further accelerate our full line product offering and market penetration. Earnings per share are expected to exceed revenue growth. In other words, we are investing in profitable growth.

A strong foundation

Marel is well positioned for this journey. A broad product offering, superior technology, global presence and significant investments in our infrastructure in recent years provide a strong foundation to build on. Revenues are well diversified across business segments and geographies. Digitalization and further automation present new opportunities to work with our customers to advance food processing. Marel’s Innova food processing software has already been installed in over 1,800 plants worldwide and offers countless opportunities.

Capital structure and distribution of profits

Marel’s financial position is strong. In 2017, EUR 15.3 million were paid in dividends to shareholders, treasury shares were purchased amounting to EUR 63.5 million and Sulmaq in Brazil was acquired for a combination of cash and treasury shares. Significant investments were made in solidifying the company’s footing as a global leader in its field and preparing for its future growth, including investments in: innovation; taking IT to the next level; expanding our existing manufacturing facilities; and improving the working environment of our employees. Strong operating results and debt reduction resulted in a leverage of 1.9 times debt to EBITDA at the end of the year, which is  just below the lower end of the 2-3 times targeted leverage ratio.

In line with our capital allocation and dividend policy, the Board of Directors will propose to the 2018 Annual General Meeting that a dividend of EUR 4.19 cents per share, corresponding to 30% of net profits for 2017, be paid to shareholders. Furthermore, the Board of Directors has authorized the purchase of treasury shares of up to 20 million nominal value, which can be used as payment for potential future acquisitions.

Since its listing, Marel has created excellent value for shareholders. In 2017, the share price increased by close to 33%, measured in Icelandic krona, and 27% measured in euros. The number of shareholders increased from 1,907 to 2,206.

Corporate social responsibility

Marel’s Board of Directors is committed to good corporate governance and ethical business practices, promoting the long-term interests of shareholders. We strive to be a good corporate citizen. We emphasize corporate social responsibility not least because we are convinced it is good business. A good reputation, responsible use of resources, taking care of the environment and having employees who take pride in their work is good business. 

To guide the organization on responsible conduct, Marel has established a policy on corporate social responsibility, which focuses on three areas: people, planet and profits. We are a signatory of the United Nations’ Global Compact and participated in NASDAQ’s Sustainable Markets Initiative in 2017. We are proud of the advancements made in corporate social responsibility reporting during the year and will continue on that journey in 2018.

SHARED VALUE CREATION

Calls for rethinking the role of businesses in society grow ever louder. Companies are continuously being pressured to play a more prominent role in addressing social challenges. The demand for greater private sector involvement in achieving the United Nations’ Sustainability Development Goals is a good example. The combined forces of public, private and civil actors are necessary to achieve the required scale and impact.

The immense societal challenges of sustainably feeding the world’s growing population can only be addressed with technology, innovation and changes in behavior. We simply must find ways to do more with less. This is the core of Marel’s business; increasing yields and quality, optimizing the use of scarce resources such as water and energy, increasing food safety and traceability, as well as improving employee satisfaction and animal welfare.

Our business is about creating economic value that also makes a positive contribution to society. In partnership with our customers we are transforming the way food is processed. Our vision is of a world where quality food is produced sustainably and affordably.

On behalf of the Board of Directors, I congratulate the Marel team on their impressive results and achievements in 2017. We express our recognition of their dedication and hard work. We fully appreciate the continuing commitment and support of our shareholders.

Asthildur Otharsdottir,
Chairman of the Board

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