Risk management

Earnings volatility risk

Marel’s operational results are subject to volatility. Macro- and microeconomic factors can influence our ability to predict revenues, costs and expenses that affect our growth and profitability objectives. The short- and long-term interest rate outlook is a factor in estimating the timing of our customers’ investments, as it influences the ability and cost of capital to finance those investments. Timing of investments can impact Marel’s cash flow and stable cash flows are crucial to maintaining financial health. Our business model, with revenue streams generated by different business segments, geographical areas and product mix, allows us to adapt and respond to earnings volatility throughout economic cycles.

Foreign exchange risk

As an international company, Marel is exposed to foreign exchange risk arising from various currency movements, primarily with respect to the EUR/USD exchange rate for revenues and the EUR/ISK rate on the cost side. Marel takes advantage of natural currency hedges by matching revenues and operational costs as economically as possible. The company’s funding is denominated in its main operational currencies to create natural hedging in the balance sheet. Where necessary, financial exposure is hedged in accordance with Marel’s policy on permitted instruments and exposure limits.

Supply chain management risk

As a manufacturer of leading technology solutions, we rely on prompt input as well as a continued supply of scarce resources. Rapidly shifting consumer preferences and unpredictable customer demand patterns pose significant challenges for supply chain managers. Marel makes use of its global platform to mitigate supply chain risks while continuing to adopt new supply chain technologies. Dynamic inventory management for spare parts, such as the development of global distribution centers, contributes to mitigating the risk. The company stays agile and proactive when prioritizing its manufacturing needs.

Geopolitical risk

Marel is exposed directly and indirectly to geopolitical events as a global company. These events may impact our employees, customers and suppliers alike. Diversified geographic presence, a comprehensive product portfolio and strategic sourcing practices contribute to the resilience of business operations. Building strong relationships with local business partners further mitigates against adverse impacts. We take proactive steps to protect our stakeholders from the long-term implications of geopolitical events, facilitated by dedicated crisis management teams being in place to actively monitor and respond to this risk.

Innovation risk

Factors such as sustainability, changes in technology, failure to understand customer needs and inability to enforce intellectual property rights can affect our objectives. Our success depends on our ability to develop and successfully introduce new products, in addition to ensuring the competitiveness of existing ones, including solutions and software. Marel remains committed to investing in the transformation of the food processing industry by committing appropriate resources to support its ambitious innovation objectives.

People management risk

A high turnover rate, disengaged employees, gaps in workforce skills or misalignment of those skills with the company’s needs, and inadequate succession planning can all harm our business. Workplace instability, absenteeism and the long-term effects of the pandemic, coupled with changing global workforce preferences, further increase the risk of effective talent management. The ability to proactively respond to workforce needs is critical to mitigating talent retention risks. Marel remains a desirable place to work that attracts and retains talented employees. We continue to implement initiatives to enhance motivation and engage with our workforce in a personal manner.

Reputation and compliance risk

Marel operates worldwide and needs to comply with numerous and changing laws and regulations. Failure to comply can lead to penalties and adverse publicity. Responsible business decisionmaking, guided by respect for civil, social and cultural rights, is increasingly important. Marel ensures that our business activities promote and protect the rights of all stakeholders, including employees, communities and the environment. The evolution of social media further increases the risk of reputational damage. 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 generally accepted standards.

Information security risk

Failure to secure our information systems and data could result in operational disruptions, financial losses and reputational damage. Laws and regulations regarding cybersecurity are becoming more prescriptive, which increases our responsibilities. Additionally, in a connected world, we share the responsibility for securing our customers’ data. Marel continues to invest in new facilities and infrastructure while upgrading existing facilities and infrastructures to ensure their integrity and availability in case of adverse events. Additionally, Marel is investing in international standardization certifications to demonstrate our continued commitment to information security