Tough salmon feed market pegs back BioMar earnings
Feed producer BioMar Group said today that it had increased revenue and volumes in 2018 but earnings (EBITDA) did not keep pace due to competition in the salmon feed market in Norway.
The Danish company’s EBITDA in 2018 was DKK 713 million (£82m), just DKK 1m more than in 2017, on revenues that increased 4% from DKK 9,955m to DKK 10,328, mainly derived from a growth in volumes of 5%.
The company said it experienced a very positive year across geographies and species, except in Norway where the company did not win the sales contracts expected.
“We have not fully been living up to our expectations, but I believe we have leapt forward and created a solid foundation for sustainable business at a truly global scale,” said chief executive Carlos Diaz in a press release.
Efficiency improvements
“Furthermore, we have during the last part of 2018 taken several initiatives to improve our competitive position in Norway through organisational changes and efficiency improvements, building upon our strong product portfolio within salmon.
“Having said this, we believe the actual competitive conditions in Norway are not sustainable in terms of profitability. For the time being there is enough capacity in the market, but with the current market growth there will, in the near future be a need for new capacity investments.
“However, with the current return on invested capital in the market, it will be difficult to defend further investments.”
Vice-president of salmon division
The organisational changes Diaz referred to included the promotion of Patrick Campbell, managing director of the Scottish business unit, to vice-president of the Danish company’s salmon division in January after delivering “remarkable business results”.
In another promotion, global R&D director Håvard Jørgensen became managing director in Norway.
Diaz said BioMar continues to see possibilities for shrimp-feed growth in Ecuador, and said new companies in China and Turkey have both experienced a year with increased volumes and earnings, despite a delay in the start-up of a factory in Wuxi.
“We are looking forward to a year with revenue at the same level as in 2018 but with increased earnings. We expect to generate EBITDA in the range of 820-890 million from our consolidated companies of which approximately 130 million DKK will be derived from new IFRS16 accounting rules. At the same time we continue our strategy of sustainable growth. I am looking forward to opening the second factory in China, preparing for the start-up in Australia and the inclusion of our third production line in Denmark”, concluded Diaz.
