BioMar upbeat about full year earnings

By Jane Byrne contact

- Last updated on GMT

Credit: GettyImages
Credit: GettyImages
Danish fish feed group, BioMar, reported a 2% increase in volumes sold in its third quarter (Q3) for 2018, which it said mainly derived from the acquisition of Alimentsa in Ecuador and strong sales in Chile; its reported lower sales in Norway.

The company said it grew its overall revenue by 2% in the quarter, but reported lower interest, tax, depreciation and amortization (EBITDA) for the period.

Its total revenue improved by 2% to DKK 3,104m in Q3 2018 from DKK 3,048m in Q3 2017. The Q3 2018 EBITDA was DKK 246m, compared with DKK 252m in Q3 2017, it added.

Profit after tax from associates and joint ventures rose from DKK 11m in Q3 2017 to DKK 21m in Q3 2018, it said.

It said it maintains its forecast of full-year 2018 revenue of about DKK 10.0bn ($1.51bn) but raises its EBITDA to the range of DKK 690-715m against the previous range of DKK 665-705m partly due, it said, to better than expected climatic conditions and first effects from the initiatives taken.

Q3 results details

The salmon division saw an expected 4% decline in volumes sold in the third quarter due to a drop in sales to the Norwegian market, whereas sales improved in Chile and Scotland, said BioMar.

The EMEA division reported lower overall volumes with underlying improvements in Southern Europe and falling volumes in Northern Europe, where fish farming conditions suffered due to the exceptionally warm summer period.

BioMar said its non-consolidated feed businesses in Turkey and China had combined revenue of DKK 231m in Q3 2018, up from DKK 214m in Q3 2017. The revenue improvement was driven partly by higher prices of raw materials in China triggered by politically motivated trade restrictions, said the Danish feed manufacturer.

Status of new plant builds

While Alimentsa has been integrated with the rest of the BioMar businesses, there are still positive synergies and additional potential to be achieved, said the company. The business in Costa Rica is one of the BioMar units that are readily expected to benefit from the synergy potential with Alimentsa, it added.

In China, the company is currently building a new fish feed factory in Wuxi near Shanghai in a joint venture with Chinese partner Tongwei. The new facility will have an annual capacity of 50,000 tons of fish feed. BioMar said construction of the plant had been delayed due to challenges arising in the cooperation with a local contractor, but the project is now on track, and it said the facility is expected to be commissioned in the Q4 2018.

The company said the new feed factory in Tasmania, Australia, first announced in March 2017, is progressing to plan, but obtaining local regulatory approval postponed the project by a couple of months, and BioMar now expects the new facility, with annual fish feed capacity of about 110,000 tons, to be ready early 2020.

Outlook

From the start of the year, BioMar said it had expected general market conditions to be challenging in 2018, with moderate growth in core markets combining with intense competition:

“Although competition in the Norwegian market accelerated considerably already in 2017 due to an increase in market output capacity, negotiations for major feed contracts held over the summer of 2018 were still more difficult than anticipated. As a result, BioMar did not win feed sales contracts in Norway for the second half of 2018 in the volume otherwise anticipated, causing the company to lower its earnings guidance after the first six months of the year.”

The company said it has taken a number of steps and initiatives to grow volume sales in the Norwegian market and to achieve sustainable long-term profitability.  

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