2015 was a good year for Marel. It was a year of profitable growth and important strategic actions.
The Simpler, Smarter, Faster refocusing program initiated at the beginning of 2014 was successfully completed at the end of the year; the program’s objective of being able to do more with less was achieved. Over the course of the two years, Marel revised its organizational structure to facilitate value creation across industries and functions and took important steps in rationalizing the product portfolio and manufacturing footprint. Significant investments are being made in technology platforms to make Marel fit for the future. At the same time, there has been continued focus on creating value for our customers. These actions, supported by favorable market conditions, have resulted in strong revenue growth, improved profitability and a robust platform for sustainable future growth.
An important strategic milestone was achieved in November, with the agreement to acquire MPS, a global leader in primary processing solutions for the pork and beef industry, as well as in innovative solutions in water treatment and food logistics. The acquisition is a great fit, supporting Marel’s full line offering in the meat processing industry and contributing to a more balanced revenue split between industry segments and geographies. Pro forma revenues for the combined business are approaching €1 billion, with healthy profit margins.
Marel’s balance sheet remains robust. Strong operating results, along with support from long-term financing partners, enabled favorable financing of the acquisition by increasing and extending loan facilities without raising further equity capital. Leverage at closing was at the higher end of the target range of 2-3 times EBITDA. In line with our capital allocation and dividend policy, the Board of Directors has proposed to the Annual General Meeting that a dividend payment of €11.3 million, corresponding to 20% of net profits, is paid to shareholders. During the year, the company acquired 31 million own shares to use in relation to potential acquisitions and for fulfilling employee stock option agreements.
The developments in 2015 are fully in line with our strategy. The underlying growth drivers in our industry remain strong. There is ample room for further improvements in our internal operations and the opportunities in the food industry are boundless. Marel is well positioned for sustainable growth and value creation.
In 2015, we set out to sharpen our vision, values and brand identity as well as formalize our approach to corporate social responsibility.
The refined vision reflects our purpose, how we make our mark on the industry and what makes us different as a partner and an employer. It underlines the commitment to our customers, the environment, and society, and our commitment to contribute to the development of a sustainable future:
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.
We also formalized Marel’s approach to corporate social responsibility, setting guiding principles for the approach to people, the planet and profitability. Social responsibility is not an afterthought at Marel; it is at the very core of our business. We strongly believe in the opportunity to create economic value in a way that also creates value for society by addressing its needs and challenges.
Population growth, combined with urbanization, rising incomes and lifestyle changes, is expected to result in a more than 50% increase in food demand by 2030. Focus on the environment and sustainability is constantly increasing. A sustainable food system implies the use of resources that do not exceed the capacity of our planet to replace them. Today, we are using too much of scarce resources such as water and energy for food production and there is far too much waste in the food value chain. It is estimated that almost one billion people are suffering from undernourishment, while nearly another billion are obese. The colossal social challenges of fulfilling rising consumption demands in an environmentally, economically and socially sustainable way represent a wealth of opportunities for Marel and its customers. The ultimate goal is to embrace innovation and new technologies to enable more food supply with less use of resources.
Marel’s Board of Directors is committed to good corporate governance and ethical business practices that promote the long-term interests of shareholders and help build trust in the company. Our code of conduct puts integrity and values at the core of all our activities and decisions.
We emphasize communication of honest, consistent and transparent information to our shareholders, financial partners and other stakeholders with the aim of establishing trust and understanding.
In 2015, the Board of Directors conducted a comprehensive review of Marel’s corporate governance framework. It is imperative to revisit the discussion on governance, roles and responsibilities on a regular basis. Our review resulted in updated versions of our rules of procedures and identification of areas for further development.
Our internal review was followed by an external audit of the corporate governance structure and procedures, followed by a certification of the same. In January 2016, we proudly received recognition as “Exemplary in Corporate Governance,” awarded by the Center for Corporate Governance at the University of Iceland.
Marel’s Board of Directors is dedicated to its duty of providing strategic direction, challenging and supporting management as well as performing our fiduciary supervisory duties. Sustainable shareholder value creation in Marel is our ultimate objective.
The Board’s annual self-assessment and directors-only session is an important forum for aligning our focus areas and identifying areas of improvement. The results set the stage for the Board’s agenda for the upcoming year and are reflected in the targets of management incentive programs. In 2015, the focus was on growth and strengthening the foundation by executing the Simpler, Smarter & Faster program, closing the MPS acquisition and preparing for transition into a longer term, full potential approach. The ambitious strategic targets set at the 2006 annual general meeting are being realized. Our vision for the future is clear. In 2016, we will provide further insights into future targets and the strategic objectives ahead.
On behalf of the Board of Directors I congratulate the Marel team on the results and achievements made in 2015 and extend our appreciation for their commitment, dedication and hard work. We thank our shareholders for their trust in Marel and for giving us the opportunity to take part in this great journey.
Marel has a strong foundation for continuous growth and sustainable value creation. The opportunities are boundless – there are exciting times ahead.
Chairman of Marel's Board of Directors