Marel sees slow recovery across processing sectors

The company said that credit for large-scale projects remains difficult to secure in many areas, including North America ands some parts of Eastern Europe, which is causing delays for some of these major contracts. But Marel said there had been a “noticeable improvement”​ in the sale of medium-term developments with a “substantial increase in the number of projects in the pipeline”.​

Slow pace​

The firm made the announcements as it posted its Q3 2009 results that showed consolidated revenues of €133m and a net profit of €0.9m – compared to €170m and €4.5m respectively in the same period last year.

Marel CEO Theo Hoen said he was pleased with the operating results and that the company remained “cost conscious in view of the slow pace of the recovery”.​ The company announced it had made €25m savings in the last year mainly on cutting over 500 jobs.

The firm said that orders had only dropped 4 per cent during the traditionally quiet summer period but cautioned that the number of new contracts could be in flux in coming quarters “due to business cycle fluctuations and the timing of large projects”.​

But despite issuing a guarded forecast, Marel, which has operations in the Netherlands, Denmark, the United States, Iceland, Slovakia and Singapore, said that the signs of an upturn had already begun and that the recession had bottomed out.

Poultry sector rebound​

There was increased activity across the entire food sector with standout growth in the poultry segment – which had rebounded well, it said. Rising corn and soybean prices in North America had not prevented the closing of several large projects and processors were continuing to invest in Stork’s deboning equipment, said Marel. However, it was not expecting any new major greenfield projects until Q1 or Q2 next year. It forecast that that poultry production would jump by more than 10 per cent in markets like Russia, India, Argentina and Iran.

In the fish industry it declared sales were close to target, with Norway being its largest market by far. Sales in countries such as Canada and Lithuania are exceeding expectations while other markets are “lagging”,​ it said. New European Union regulations due to come into force in January 2010 will create opportunities for Marel as companies will have to reform management procedures after being obliged to secure validated catch certificates for all imports.

The fresh meat market had also improved, particularly for medium-sized projects, after a year-long recession, said the company.

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Added value​

The level of activity is high in further processing but conversion to sales is slow, it added. Added value processors are profiting from the fact that the economic slowdown has triggered greater consumption of cheaper proteins like poultry and processed products like sausages. They have also benefited from the increase in stay-at-home dining, especially in the US.

“Processors are responding by adapting and updating their production processes and systems,”​ said Marel.