Risk management

Marel’s operational results are subject to volatility. Factors like the pandemic and the accompanying shift in market dynamics in today’s inflationary environment, colored by labor scarcity and geopolitics, influence our ability to predict revenues, costs and expenses affecting our growth objectives. Emerging global recession risks add complexity to predicting market behavior going forward. Marel’s diverse business model with revenue streams generated by different business segments, geographical areas and product mix allows the company to adapt and respond to profit and earnings volatility throughout economic cycles. Marel is also refining its operating model to foster customer- centricity, enhance end-to-end accountability and enable cross-business collaboration.

As an international company, Marel is exposed to foreign exchange risk arising from various currency movements, primarily the US dollar, British pound, Icelandic krona, and Brazilian real in relation to the euro, as the euro is the Group’s reporting currency. Marel maintains a good natural hedge in its operations, with a good match between revenues and costs in most currencies. The company’s funding is denominated in its main operational currencies to create natural hedging in the balance sheet. Where appropriate, financial exposure is hedged in accordance with Marel’s policy on permitted instruments and exposure limits.

As a manufacturer of leading technology solutions, Marel relies on the timely supply of inputs and the continued supply of scarce resources. Market conditions remain challenging due to continued supply chain disruption and high inflation, which are causing inefficiencies in manufacturing and aftermarket, and higher costs associated with timely delivery. Marel is utilizing its global reach to mitigate supply chain risks while continuing to adopt new supply chain technologies. Specific mitigations include collaborating with key suppliers and establishing distribution centers where spare part materials are managed separately from parts intended for manufacturing. Marel remains agile and forward-thinking when prioritizing its supply chain needs.

Changes in technology, failure to understand customer needs and inability to enforce intellectual property rights can affect our growth objectives. Marel’s success depends on our ability to develop and successfully introduce new products and ensure the competitiveness of existing ones, including solutions and software. Through innovation, we will continue transforming the food processing industry by committing significant resources to support our ambitious innovation goals. To that end, Marel invests 6% of revenues annually toward research and development.

Attracting and retaining skilled people is essential to Marel’s success. We are committed to keeping employees safe and motivated while adapting to the ever-changing landscape of the pandemic. We foster flexible and hybrid working arrangements, enabling people to work remotely where possible. Marel’s policies and company culture prioritize diversity and inclusion, employee wellbeing and engagement and leadership development. Additionally, we implement initiatives to encourage staff retention, particularly in the wake of a two-year increase in turnover following a five-year period of gradual decline. All Marel managers collaborate with their teams to create action plans that nurture employee engagement.

Marel operates worldwide and needs to comply with numerous and ever-changing laws and regulations. Failure to comply can lead to penalties and adverse publicity. The evolution of social media further increases reputational risk. Marel strives to preserve and enhance its brand value, build resilience and create emotionally connected customers, employees and stakeholders while complying with all industry, regulatory and other general standards of significance.

Securing our data, solutions, information systems, and services is vital to mitigating the risk of operational disruptions, financial losses and reputational damage with existing and future customers. Marel continues to invest in people, processes, standardization, certifications and technical information security controls to ensure the confidentiality, integrity and availability of its data and products.