BioMar CEO balks at rivals’ continued trade with Russia as firm revises 2022 earnings forecast
The company said volume sales were lifted by 8% in Q1 2002, compared to the same quarter last year; its revenue rose by 34%.
While the top line is growing, it said its bottom line is challenged by raw material prices, cost of energy, and the decision to suspend trading with Russia following the country’s invasion of Ukraine.
A recent judgement in a long-running legal dispute in Norway ordering BioMar to pay NOK 36m (US$3.7m) to Norwegian fish health and research company, STIM, for infringement of a feed patent, along with changed accounting policies also impacted its earnings for the quarter.
It thus reported EBITDA for Q1 2022 of DKK 54m, compared with DKK 133m (US$18.8m) in Q1 2021.
The Danish aqua feed manufacturer is lowering its guidance for the full year, saying it now expects to generate full-year 2022 EBITDA in the region of DKK 890 to 940m as opposed to the DKK 980-1,040m range it had originally anticipated.
Impact of suspending trade with Russia
Its parent company, Schouw & Co, in a report on the Q1 financial results, said it would seem unlikely that trading with Russia will be resumed within the near future.
The group released an announcement on 20 April 2022 stating that the potential loss of sales to Russia may reduce full-year EBITDA by up to DKK 80 million and that this would primarily affect BioMar and, to a lesser extent, its other interests.
The owners also noted that the international sanctions have increased the risk pertaining to assets related to Russia. It has assets of approximately DKK 100 million with exposure to Russia, mainly relating to BioMar. “Apart from these direct effects, the Russia/Ukraine situation has had a number of indirect effects that are having a broad impact on businesses by disrupting global trade, driving up costs of materials and causing energy costs to rise sharply.”
Meanwhile, Carlos Diaz, CEO of BioMar, said that, in terms of the company exiting the Russian market, it was a “tough decision” but it was the right thing to do. Russia is typically a profitable market for feed company, generating good sales for its units in Denmark and Norway.
Diaz expressed surprise, though, at the decision of competitor companies to continue to trade in and with Russia. “This is not a food crisis for the people in Russia, but a humanitarian crisis for the people in Ukraine,” he commented.