Marel reports lower Q2 profit, expands with acquisition in Brazil

The Icelandic firm says it is 'gearing up for growth' in Latin and South America. 

Icelandic processing equipment supplier is looking back at a solid second quarter of the year, reporting "strong order intake" but a drop in earnings.

Together with the quarterly results, the company also announced the acquisition of Brazilian meat primary processing equipment provider €25 million ($29.3 million) turnover company Sulmaq, which it hopes will strengthen its position in Central and South America.

Marel reported earnings before interest and taxes (EBIT) of €35.9 million ($42.1 million), down nearly 26 percent year-on-year from €48.4 million ($56.8 million).

Net result for the quarter amounted to €18.6 million ($21.8 million), a 18 percent drop from the €22.1 million ($25.9 million) a year earlier.

EBITDA ended up at €44.2 million ($51.9 million), coming in below the €48.4 million ($56.8 million) reported in the second quarter of 2016.

Despite the lower results, Marel said "market conditions are good and Marel’s competitive position is strong."

The order book was at €418.9 million ($491.5 million) at the end of the quarter compared with €390.3 million ($457.9 million) at the end of the first quarter of the year.

Cash flow from operating activities before interest and tax was €61.2 million ($71.8 million), up from €43.7 million ($51.3 million) a year earlier.

Revenue for the first half of 2017 was €496.5 million ($582.6 million) and is at same level as pro forma revenue for the first half of 2016.

Order intake for the first half of 2017 was €565.9 million ($664 million) compared with pro forma €484.9 million ($568.9 million) for the first half of 2016. The order book was at €418.9 million ($491.5 million) compared with €307 million ($360.2 million) at the end of the first half of 2016.

Commenting on the Sulmaq acquisition, Marel said it aims to strengthen its position in the region and ensure better access "to a large and growing market for beef and pork."

The acquisition is expected to close in the third quarter of 2017, subject to customary closing conditions.

"Marel has had great success in the poultry and fish market in South America over the last two decades and is now gearing up for further growth in this 600 million people region," said Arni Oddur Thordarson, CEO of Marel.

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