PRESS RELEASE

Sales for the first quarter totalled EUR 29.9 million (ISK 2.4 billion), compared with 25.1 million (ISK 2.2 billion) during the same period last year. Sales thereby increased by about 19%.

Profit from operations EBIT was 3.1 million (ISK 246 million), compared with 2.3 million (ISK 201 million) last year.

Net profit for the period totalled EUR 1.8 million (ISK 145 million), an increase of about 19% from the year before.

Net profit per share was 0.77 euro cent compared with 0.65 euro cent the year before.

The order book at the end of March 2005 was about EUR 18.5 million, compared with 19.0 million at the end of 2004.

Accounting policies are now fully complient with IFRS, International Financial Reporting Standards. Comparative figures from previous year have been adjusted to conform to the changes.

The quarterly report for the Marel Group for the 1st quarter of 2005 was approved at Marel hf’s Board of Directors Meeting, today, 10 May 2005.

The Marel Group comprises 15 companies with operations in 10 countries. The newest company, Marel Chile, began operations in the 3rd quarter of 2004.

The following are the main results from the consolidated financial statements for Marel:

Sales in the first quarter of 2005 totalled EUR 29.9 million (ISK 2.4 billion) compared with 25.1 million (ISK 2.2 billion) the previous year. This is an increase in sales of about 19%. Based on a fixed exchange rate, sales have increased by about 21%.

Gross profit of product sales for the period was EUR 10.5 million, or 35.1% of sales compared with 9.2 million or 36.8% of sales for the same period last year. This comparative decrease is explained principally by an unfavourable exchange rate. The sales are 2% in Icelandic króna and at the same time 22% of the Group’s expenses are in Icelandic króna, mainly salaries to employees in Iceland. Sales in USD are 30% and expenses only 15%. The króna has strengthened by about 8% against the euro, from the average of the first quarter of 2004 to the same time in 2005.

Operating expenses other than cost of sales were EUR 7.6 million, and they increased by about 7.1% at the same time as sales increased by about 19%. Sales and marketing costs were EUR 3.7 million, which is about 4.4% higher than last year. Charged development costs, including depreciation of development costs from previous years, was about EUR 1.7 million, an increase of about 9.4%. The main emphasis in both sales and marketing, and in product development, has been to improve productivity and synergy with increased integration within the Marel Group. Administrative expenses were EUR 2.2 million, compared with EUR 2.0 million the previous year, an increase of about 10.1%.

Profit from operations was EUR 3.1 million or 10.2% of sales, compared with 9.2% in 2004.

Finance cost net totalled EUR 0.9 million, compared with EUR 0.4 million last year. This can be traced in particular to exchange rate losses, that based on the exchange rate when this is written have to some degree been reversed.

Net profit of the Marel Group for the first quarter of 2005 totalled about EUR 1.8 million (ISK 145 million), compared with EUR 1.5 million (ISK 132 million) the year before, an increase of about 19%. The exchange rate has been unfavourable to the company, especially the exchange rate of the Icelandic króna and the rate between the euro and the USD. Despite this results have improved, and as before the reason may be traced to rationalisation measures and the effects of increased synergy within the Group.

Total assets of the Marel Group at the end of March 2005 were booked at EUR 99.5 million, an increase of about EUR 4.0 milljónir or 4.2% from the New Year. This increase can mainly be traced to an increase in inventory, accounts receivable and net cash. Inventory and sold products that are in production increase about EUR 1.5 million, or about 5.4%. Accounts receivable increase by about 4.1% from the New Year. The age of accounts receivable calculated in number of days was on average 41 days during the first quarter of 2005, compared with 48 days for the same period the previous year.

Investment in property, plant and equipment during the first quarter of 2005 totalled EUR 1.2 million, compared with EUR 0.4 million for the same period last year. Part of investment during this period can be traced to investment intended for 2004 that was moved forward to this year.

Net cash from operating activities totalled EUR 1.5 million, compared with EUR 3.8 million the previous year. At the end of the 1st quarter 2005, net cash was EUR 4.9 million, compared with EUR 4.4 million at the end of 2004.

On average, 845 people worked for the Marel Group during the first quarter of 2005, compared with 788 during the same period last year. Of these 845, two companies in Iceland employed 318, while 527 were employed abroad by 13 companies in 9 countries.

5-year comparison

Marel companies

Sales by Marel companies in 2005 totalled EUR 17.2 million, an increase of about 8.8% from the previous year. Profit from operations (EBIT) of Marel companies during the period was EUR 3.0 million, an increase of about 2.9% from the year before. The company’s operations were good during the quarter, despite the fact that the companys’ operational environment worsened considerably because of the strengthening Icelandic króna. This unfavourable development, along with stiff competition on markets, creates considerable pressure on the contribution margin. To combat this, the company has implemented diverse rationalisation measures, for example standardising products, making organisational changes, and moving part of purchasing and subcontracting to Asia and East Europe. In addition, forward short-term exchange rate contracts have reduced the effect of exchange rate fluctuations. In order to ensure the company’s ongoing growth and competitiveness, it has been decided to found a subsidiary production company in Slovak Republic in the coming months.

Carnitech

Carnitech’s sales were EUR 12.7 million during the first quarter of 2005, an increase of about 37.4%. Profit from operations (EBIT) was around zero. The first quarter, as last year, was characterised by little sales to the shrimp industry, which for years had been the company’s main market. Despite performance being considerably better than last year, it is still slack. New product lines for salmon and meat have been well received by customers, but their production costs are still high, resulting in lower contribution margin. It is anticipated that it will take some time before Carnitech’s performance becomes satisfactory.

International Financial Reporting Standards, IFRS

Marel has completed preparing its information systems and internal management processes to utilise fully International Financial Reporting Standards (IFRS) starting in 2005. Financial statements for 2004 have been adapted to those changes and the equity at the beginning of 2004 have been changed accordingly.

Marel explained the affects of IFRS in a press release to the Iceland Stock Exchange last 4 April, and stated that there were four aspects in particular that have an influence on Marel hf’s performance due to the inplementation of IFRS: part of development expenses will be capitalised, goodwill will no longer be depreciated but instead a so-called impairment test will be applied for evaluation, methods of depreciating operational assets are changed, and changes have also been made on converting the affect of subsidiaries.

Their total affect results in profit from operations (EBIT) for 2004 being EUR 12.1 million, which was shown as EUR 10.6 million. As a percentage of sales, EBIT becomes 10.7% compared with 9.4%. Profit from operations before depreciation and amortization becomes EUR 16.5 million or 14.7% of sales, and was previously EUR 14.1 million (12.5% of sales). Net profit for 2004 increases from EUR 6.6 million to EUR 8.0 million.

With the changes, the company’s net assets on 1 January 2004 increase by about EUR 2.7 million. On 31 December 2004, it will be 33.3 million, but in the previous financial statements net assets were EUR 29.4 million. The equity ratio therefore increases from 32.4% to 34.8%.

Prospects

The Group’s order book at the end of the first quarter 2005 totalled EUR 18.5 million, compared with 19.0 million at the beginning of 2005. Strong product development and the ongoing work over the years to bolster the company’s marketing operations have placed the company in a strong competitive position.

Trends in exchange rates, however, have been unfavourable for the company at this time. The strengthening of the Icelandic króna has resulted in increases in the company’s Icelandic expenses, while the weaker dollar against the euro has resulted in decreased income. Forward short-term exchange rate contracts have reduced the affects of exchange rate changes but the effects of them are now mostly behind. Short-term prospects are therefore difficult, and it is considered difficult to maintain the current contribution margin over the coming months. Over the long term, however, prospects are good, considering the correction of the Icelandic króna’s exchange rate, new production company in an advantageous operational environment, and improved operations at Carnitech when the new product lines have become established.

Consolidated Financial Statement publishing for 2005

Marel plans to publish the financial statements for 2005 on the following days:

The company’s AGM is planned Tuesday 28 February 2006

Marel will present performance results for the first quarter of 2005 on Wednesday 11 May 2005 at 8:30 AM at the company’s headquarters at Austurhraun 9 in Garðabær, Iceland.