Marel reports higher revenues, lower profits for H1

International food processing equipment manufacturer Marel saw a strong order book and increased revenue for the first half of 2022, but the group’s net profits were slashed by nearly 30% year on year.

Marel, which is headquartered in Iceland, has reported an order book of €893.5m (£748.3m) for H1 2022, compared with €740.7m (£620.3m) for the same period last year. Revenue for H1 2022 was €768.9m (£644m), compared with revenue for H1 2021 of €661.5m (£554m).

Net profit for the first six months of this year was €31.3m (£26.2m), down from €44.5m (£37.3m) in H1 2021.

The EBIT (earnings before interest and taxation) margin was 7.3%, a fall from 11.6% in H1 2021.

The reported results were in line with a profit warning issued earlier this month.

Marel said the acquisitions this year of US firm Wenger and Netherlands manufacturer Sleegers Technique had contributed positively to the group’s order book and revenues.

The H1 statement said margins had been hit by high operating expenses, costs pressures due to inflation, logistics and continued supply chain disruption as well as “as slower ramp up of revenues than expected.”

Marel said it expected improved operational performance in the second half of this year, having already taken action to cut the workforce by 5% and resolve bottlenecks.

CEO Árni Oddur Thórdarson said: “Second quarter results are mixed; on one hand we are seeing record orders received of €472m at new price/cost levels that will support profitability going forward, while on the other hand revenues at €397m and EBIT 6.3% were below expectations.

“As stated in the preliminary Q2 2022 results issued last week, we are taking immediate action to lower our cost base with a 5% reduction of our global workforce. This kind of decision is always difficult, and we will do our best to assist affected employees… we have actively raised prices in recent quarters. In hindsight we were too late to raise prices when faced with the inflationary environment last year. The all-time high orders reflect our strong brand and market position, being able to pass on costs in an inflationary environment that demands more automation and sustainable use of raw materials.”