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Marel cautious despite Q3 earnings rise

Icelandic processing equipment supplier braces for orders slowdown in coming quarters.

Icelandic processing equipment supplier Marel posted a 6.4 percent increase in third quarter earnings but warned of headwinds in the coming quarters linked to "trade constraints and geopolitical issues."

Earnings before interest and taxes (EBIT) rose to €40 million ($45.3 million) from €37.6 million ($42.5 million) a year earlier.

Revenues for the third quarter increased 14 percent to €282 million ($319 million) from €247 million ($286.2 million).

Global fish, poultry and meat markets are experiencing what Marel CEO Arni Oddur Thordarson terms "interesting dynamics."

"Trade constraints and geopolitical issues result in a mismatch in food supply and demand within regions while global consumer demand continues to rise," Thordarson said.

"This may lead in lower order intake for the next two to three quarters compared to the great start to the year."

Soft orders for Marel Fish

Marel Fish contributed €38.1 million ($43.3 million) in revenues in the third quarter, or 14 percent of total revenues. EBIT amounted to €4.4 million ($5 million).

This is a 20.6 percent increase in revenues and a significant rebound in EBIT compared with the third quarter of 2017. In the first nine months of the year, revenues for Marel Fish were €121.3 million ($137.9 million), up 33.6 percent over the year.

Orders received in the third quarter were soft for Marel Fish, colored by low level of investments in Nordic markets. However the pipeline is building up in the United States and new markets.

"The short-term operational margin for Marel Fish is likely to adjust downwards, however management is targeting medium and long-term EBIT margin expansion for the industry segment," said the company.

Marel Fish is focused on becoming a full-line provider for wild whitefish, farmed salmon and farmed whitefish.

"Higher investments in innovation to close application gaps, and greater emphasis on standardization of the business have delivered good orders received and improved margins."

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