Feed formulation innovation and the start-up of production in Australia were some of the most important factors driving the improvement in that business area, said parent company, Schouw & Co, in a report on the financials.
Despite the complex business environment, the feed manufacturer delivered solid financial results with an 8% increase in volume sold and 4% increase in revenue compared to Q3 last year, noted the review.
“It is difficult right now for everyone to predict what the world will look like just few months ahead. Are we facing new massive lockdowns across the globe, or will there soon be light at the end of the tunnel? Right now, we will continue taking care of our people and securing supply and business continuity for our customers,” said Carlos Diaz, CEO, BioMar.
The EBITDA, though, declined in Q3 compared to last year; however, year-to-date EBITDA surpasses the 2019 level, said the company.
Indeed, Schouw & Co stress that the feed manufacturer has managed to maintain operations at near-normal levels in 2020, even if there were some lowlights.
“The negative impact on BioMar’s overall volume sales has been relatively modest to date, but certain markets have faced more challenges than others, particularly Ecuador and the Mediterranean markets.”
The Latin American division reported a year-on-year drop in third quarter revenue, as the coronavirus situation disrupted shrimp exports from Ecuador to China during the quarter. “This reduced demand and changed the product mix from high-yielding to more ordinary feed products.”
Those exports to China have been restored, but at a lower level and one subject to greater uncertainty than was the case in the pre-COVID-19 world, commented Schouw & Co.
BioMar’s EMEA division also saw a year-on-year drop in revenue in Q3, it said. The setback was mainly attributable to the coronavirus situation, which led to a sharp drop in demand from the hospitality sector during the quarter, and to windstorm damage in Spain, which has reduced that country’s fish-farming capacity.
Non-consolidated businesses performance
The 50%-owned feed businesses in Turkey and China, which are not consolidated, reported combined lower Q3 2020 revenue and EBITDA compared to that registered in Q3 2019.
“Both companies contributed to the deteriorated performance; Turkey due to lower volume sales, and China due to its higher cost base following the start-up of the new factory in Wuxi in the second quarter of 2020.”
The non-consolidated businesses also include the Chilean fish farming company, Salmones Austral, and three minor businesses, Letsea, ATC Patagonia and LCL Shipping. The non-consolidated companies are recognized in the Q3 2020 consolidated financial statements at a DKK 44m (US$6.98m) share of loss after tax, compared with an DKK 11m share of profit in Q3 2019.
“The decline was largely attributable to lower earnings in Salmones Austral due to significantly lower settlement prices for farmed salmon.”
In terms of outlook for BioMar’s business, Schouw & Co’s report notes that demand for farmed fish and shrimp is progressing well in most markets. “However, the current coronavirus situation has disrupted the usual sales channels for farmed fish and shrimp, leading to import/export restrictions and resulting in highly volatile supply, demand and pricing.”
The parent company said it quite obvious that market developments are subject to above-normal uncertainty, both in terms of how the world’s core markets are evolving and how new coronavirus outbreaks may lead to restrictions that could impact BioMar’s sales and risk profile.
“Nevertheless, BioMar continues to expect an increase in volume sales in 2020 relative to 2019, but the improvement will likely be smaller than originally anticipated and very much driven by the strategic investments implemented in recent years.”
In that context, it said BioMar is maintaining its guidance of revenue of about DKK 11.5bn.