Annual report 2018
Meat industry is one of Marel’s three key protein industries. Marel Meat is a leading global supplier of integrated systems and advanced stand-alone processing equipment to the red meat industry. Our equipment handles all stages – from live animal receipt, to finished consumer packs – fresh, chilled, cooked or frozen. Marel Meat contributed EUR 387 million in revenues in 2018, or 33% of the total, translating to an EBIT of 11.3% (operating income adjusted for PPA related costs, including depreciation and amortization).
The consumer value of the global poultry, meat and fish market is estimated to be around EUR 1,200 billion. Meat is the largest market segment, with an estimated value of EUR 600 billion, followed by poultry and fish respectively. More specifically for Marel, the market for sale and maintenance of food processing equipment for poultry, meat and fish is estimated to be around EUR 10 billion. Of this, meat processing equipment is estimated to be around EUR 5.5 billion, a figure which is expected to grow annually by 4-6%.
Integration continued to be the key theme for Marel Meat in 2018. Over the course of the year, we worked diligently on the integration of new team members into the front-line sales team, following the MPS (Meat Processing Systems) acquisition that made us a full-line supplier to the meat processing industry.
We unified our product offering and the team providing it, following an approach as simple as it was effective. Our whole team is trained to be able to represent the full product line, from farm gate to final pack. Intralogistics and wastewater treatment were also areas of focus, with successful projects undertaken in both fields.
In 2016, we became a full-line supplier of primary, secondary and further processing solutions for meat with the acquisition of MPS (Meat Processing Systems). Another major milestone towards closing the remaining gaps in our product offering and geographical reach was the acquisition of Brazilian meat processing equipment manufacturer Sulmaq in 2017. In 2018, we further reinforced our full-line approach by acquiring the German firm MAJA. MAJA’s product line and complementary geographical reach have strengthened our position in the meat industry globally and expanded market penetration.
We continued our efforts on unifying our teams throughout 2018. A new structure for Marel Meat was introduced, with new management leading sales, service, innovation and engineering functions. Through training and leadership, our management is ensuring effective collaboration between sales and service to serve our customers better and deliver solutions that help them improve their processing operations from post-farm gate to consumer-ready packs.
Our red meat product offerings link up to cover the entire value chain. Our position as a full-line supplier was reinforced in 2018, with both the launch of new products and improvements to existing solutions.
During 2018, Marel Meat added the Robot Bung Remover (MBR) to the M-Line robot series, which is already well established in pig slaughter plants. We also continued the development of the DeboFlex leg system and the trim handling systems, while at the same time introducing the portion cutters V-Cut 160 and V-Cut 200, which set new standards in volumetric portioning.
Our highly effective Innova software is a key element of our full-line processing equipment. This software is at the heart of many of our cutting and deboning solutions where product traceability is essential. It enables customers to mitigate operational risk, providing full traceability from farm to fork.
Sales of food logistics systems were particularly good in 2018. We offer intralogistics solutions that range from small conveying systems to large integrated turnkey projects. All our systems are modular, making them easy to fit into existing plants. Another key feature is seamless integration between the intralogistics systems and our Innova Food Processing Software. Coupled together, they can ensure full control of the products through processing, storage, and distribution.
Our automatic, robotic slaughter solutions (M-Lines) were installed at many customers across the globe in 2018. The M-line generation of hog floor slaughtering uses articulating arm robots and the latest techniques in 3D scanning to ensure high cutting accuracy. Automation reduces the need for manual labor in the slaughtering process and, with less manual handling needed, the risk of contamination is lower and hygiene is improved. This can extend the shelf-life of fresh pork products, adding value for both food processors as well as end consumers.
In 2018, Marel Meat continued to work on innovative equipment and software solutions for the industry. As a company thriving on innovation and the development of high-tech applications, Marel sees opportunities where others see challenges. Our teams at Marel Meat are adept at turning ideas into reality, and challenges into solutions. Intelligent software applications have become a key facet of the meat production solutions we offer our clients.
The SensorX Electus is a part of our trim handling system and is based on X-ray technology. It measures the precise lean-to-fat ratio (CL ratio) as well as detecting bones and contaminants. Since it became available as a standard solution in 2018, the system has been installed at many customer sites. SensorX Electus provides accurate information for informed decision making that can help further processors and grinding facilities processing meat trim produce products that meet their specifications. They improve their margins while increasing the safety of their products.
Since the I-Saw was released for sale in 2018, several processors have added this portioning solution to their operations. Using camera-vision scanning technology, the I-Saw cuts boneless as well as bone-in frozen meat products into portions of consistent thickness or weight. This portion cutter is designed with ultra-high-speed bandsaw blades that produce a clean-cut product with minimal smear or bone chips.
We continued improving and adding to our groundbreaking solution for pork deboning, DeboFlex, in 2018. Three new modules: shoulder blade pulling, shank pre-cutting and shank-sawing, make deboning and cutting easier and more efficient. The shackle-based logistical solution takes care of transporting fore-ends and legs through overhead conveyers and in a controlled flow past work stations. The solution creates a safer and more ergonomical working environment for operators who can focus fully on the task at hand.
Thanks to strategic acquisitions and organic growth, Marel Meat now covers the entire value chain from live animal intake to finished consumer product. Our projects in 2018 reflect this scope, as larger installations and greenfield projects became more prominent. Some of our largest greenfield projects took us to China, Japan, South Korea, Russia, Spain, and North America.
In China, we completed a greenfield project for the beef processor Zhejiang Aozhou Cattle Industry. The new plant is equipped with a slaughtering system, a StreamLine system for deboning and trimming, logistics and water treatment, all connected with overarching Innova Food Processing Software. Another customer, Pronaca upgraded their existing pork processing plant in Ecuador with a new slaughtering, cutting, deboning and logistics solutions from Marel Meat. In Vietnam, Masan Group Corporation inaugurated its new greenfield pork processing complex, fully supplied with Marel equipment and software for slaughtering, cutting, deboning and logistics. We also developed a complete greenfield plant for pig slaughtering for Litera Meat in Spain.
Animal wellbeing is, and will always be, an issue of utmost importance in the protein sector. Increasingly conscious consumers want products that are produced sustainably and ethically. Marel Meat worked closely with customers in 2018 on these issues, delivering systems and equipment that improve production sustainability, both in terms of raw material utilization, as well as energy and water consumption. We emphasize helping processors to be flexible in their product offerings, while simultaneously adhering to animal wellbeing standards in the primary part of their processing and ensuring sustainability throughout the value chain. This applies to their processing facilities and their equipment set-up.
Wastewater treatment is an area where Marel Meat directly contributes to clients' sustainability efforts. The Marel water treatment division is part of Marel Meat. The systems are designed to ensure the most efficient use of water and include units that treat wastewater so that it can be re-used in food processing operations. This long-standing, internationally recognized division was integrated in 2017 and offers primary, secondary, and tertiary treatments for all types of food processing wastewater. Marel water treatment systems are efficient, easy to use, and characterized by low maintenance.
Given the various trends governing our sector, Marel Meat sees opportunities for expansion in both traditional growth markets, as well as what some would call saturated markets. As a well-established provider with a full-line offering for primary, secondary and further processing, we see our basic growth being driven by traditional demands such as improvements in yield, quality and throughput.
In the more advanced sectors of the market, where automation and production optimization have already occurred, customers will need to continue their investments in order to sustain their margins. Our approach is to introduce new technologies to increase automation still further and boost yield. We have witnessed a clear trend in recent years towards greater requirements for automated systems and processing procedures. As processors face tougher competition, they realize that they need to implement new technologies to stay at the forefront and meet fluctuations in consumer demand.
In 2019, the global production of beef and veal is forecast to reach 63.6 million tons, an increase of 1.2% from previous year. Global trade in beef and veal is expected to grow by 0.2% and reach 10.6 million tons.
Brazil has replaced India as the world's largest exporter of beef and veal and is expected to remain the top exporter in 2019. Brazil's exports are expected to rise by 4.8% to reach 2.2 million tons in 2019.
The US is expected to continue as the leading producer in 2019, accounting for 20% of total production, followed by Brazil with 16%.
On the import side, China (including Hong Kong) has been the world's largest importer since 2017 and is expected to remain the leader in 2019.
Source: USDA Foreign Agricultural Service (2018, October 11). Beef and Veal Production and Trade. Retrieved from: https://apps.fas.usda.gov/
In 2019, global production of pork is forecast to rise by 1.4% to 114.6 million tons. Global trade in pork is expected to grow by 3.0% and reach 8.8 million tons.
China continues to dominate the pork market, accounting for an estimated 48% of world production in 2019, followed by the EU with 21%.
The EU is the world's largest exporter of pork. Its exports are expected to grow by 3.3% and reach 3.2 million tons in 2019.
China continues to be the largest importer followed by Japan, which it overtook in 2016.
Source: USDA Foreign Agricultural Service (2018, October 11). Pork Production and Trade. Retrieved from: https://apps.fas.usda.gov/