Net profit for the Marel group for the second quarter of 2004 was EUR 2,530 thousand (ISK 221 million).  Profit for the same quarter last year was EUR 1,735 thousand (ISK 174 million).  Profit before depreciation and amortization (EBITDA) was EUR 4,566 thousand, which is 14.6% of sales.  Operating profit (EBIT) was EUR 3,728 thousand, or 11.9% of sales.

During the first half of 2004, Marel’s net profit was EUR 3.8 million (ISK 333 million), which is the best result for the first six months in the company’s history.  Profit before depreciation (EBITDA) was EUR 7,362 thousand, or 13.1% of sales.  Operating profit (EBIT) was EUR 5,702 þúsund, or 10.1% of sales, the highest ever.

The financial statements for the Marel Group for the period January to June 2004, which have been reviewed by the company’s auditors, have been approved by Marel’s Board of Directors today, 10 August 2004.
The Marel Group comprises of 14 companies with operations in 9 countries.  The newest, Póls hf in Iceland, was added at the beginning of the second quarter of 2004.

The European Commission has decreed that from 1 January 2005 all listed companies in the European Union must prepare their group accounts using International Financial Reporting Standards (IFRS).  Marel has started to adapt its accounts to IFRS, among other things by changing their information systems, internal management processes, etc.  This is reflected in the presentation of the accounts for 2004, and these changes do not affect the financial results.
Comparative figures from previous years have been adjusted to conform to changes in the presentation for the current year.

Following are the main results from the consolidated financial statements of the Marel Group:

Sales in the first half of 2004 totalled EUR 56.4 million, compared to 54.1 million the previous year, an increase of about 4.2%.  On a fixed euro/USD exchange rate, however, the growth becomes about 6%.
The gross profit for the period January to June 2004 was EUR 20.9 million, or 37.1% of sales compared with 17.7 million or 32.8% of sales the previous year.  This increase in gross profit can mainly be attributed to increased productivity in sales of standardised products, as well as various organisational changes and increased rationalisation in purchasing.

Operating expenses other than cost of sales were EUR 15.6 million, an increase of about 2.9%.  Sales and marketing expenses were EUR 7.3 million, which is about 2.3% higher than the previous year.  Development expenses were about EUR 3.6 million, unchanged from 2003.  The main emphasis in both sales and marketing and in product development has been to improve productivity and synergy, and to increase integration within the Marel Group.  Administrative expenses were EUR 4.6 million, compared with 4.4 million the year before. 
Net profit of the Marel Group for the first half of 2004 totalled EUR 3.8 million, compared with 2.4 million the previous year 2003, an increase of about 59%, which is already more than for the whole year 2003.  External conditions were in many ways unfavourable, particularly the exchange rate between the ISK and the USD.

Total assets of the Marel Group at the end of June 2004 were booked at EUR 90.7, an increase of about EUR 9.4 million or 11.5% from the beginning of the year.  This growth is mainly due to an increase in cash, inventory, and accounts receivable.  The increase in accounts receivable is due in particular to several large projects that were delivered at the end of the 2nd quarter.  The grace period was on average 48 days, compared with 51 days for the same period last year.  Inventory increased as a result of standarised products expected to be delivered in the 3rd quarter. 
Investment in equipment for the 1st and 2nd quarters was EUR 0.7 million, compared to 0.9 million the same time last year.  The Marel Group invested a total of EUR 1.0 million in the 1st half of 2004.

Net cash from operating activities was EUR 4.9 million.  At the end of June 2004, net cash totalled EUR 6.3 million, compared to 6.0 million at the end of June 2003.

On average, 824 employees worked for the Marel Group during the period, compared to 756 for the same period in 2003. Of the 824 employees, two companies in Iceland employed 292, while 532 were employed abroad at 12 companies in 8 countries.

Prospects
The Group’s order book is currently satisfactory.  Customer orders slow down somewhat during summer due to vacations.  The increase in the company’s standarised products, however, will now allow for faster delivery times on orders received during the 3rd quarter.  Prospects for earnings in the next quarter are satisfactory.
Work is ongoing to strengthen the company’s sales and marketing operations, both in the company’s traditional markets in Europe and the USA, and in several new markets in South America, Southern Europe, Eastern Europe, and Australia.
Good results have been attained in improving productivity and lowering expenses over recent quarters.  Work will continue along these lines with continued emphasis on the company’s standardised products, as well as increased rationalisation in purchasing.

Consolidated Financial Statement publishing for 2004
Marel plans to publish the remaining financial statements for 2004 on the following days:

3rd quarter:  Tuesday 9 November 2004
4th quarter:  Tuesday 15 February 2005

The Annual General Meeting is planned to be held on Thursday 3 March 2005.

Marel will present the results of its financial statements for the first half of 2004 on Wednesday 11 August 2004 at 8:30 AM at Austurhraun 9 in Garðabær, Iceland.