“Earnings were strongly supported by selling prices that now much better reflect the sharply higher prices of raw materials, energy and freight,” noted a review from BioMar's parent company, Schouw & Co.
Year to date revenue for the fish and shrimp feed manufacturer amounted to DKK 12.8bn (US$1.79bn), compared with DKK 9.25bn in the same period in 2021, said the firm.
BioMar is raising its earnings forecast for 2022 to EBITDA in the DKK 960-1,000m range from its previous guidance of DKK 910–960m, based on the strong business activity in Q3 and the positive outlook for the rest of the year.
“It should be noted, however, that BioMar continues to have potential additional risk exposure of up to DKK 40m on liquid assets related to Russia, which is not included in the guidance,” reads Schouw & Co’s report.
Carlos Diaz, CEO of BioMar, said with the fall-out from the pandemic, the war in Ukraine and the company’s exit from Russia, the organisation decided to focus on improving commercial and operational excellence: “Developing our processes and creating value from data analytics is more important than ever to counteract the inflationary effects on our costs. We have been engaged in creating efficiencies in our supply chain, while working together with our customers designing new solutions for existing and new commercial relationships. We are still not at a normal profit level, but we are moving in the right direction."
Slight decline in salmon sales
The company's salmon division, covering operations in Norway, Scotland, Chile, and Australia, and supplies of feed for Atlantic salmon, Pacific salmon, and trout, reported a modest volume decline overall that was driven by reductions in Chile, resulting from regulatory restrictions in that market.
But the division’s earnings gradually improved as selling prices increased. “In addition, the Norwegian research activities made a positive contribution to earnings.”
BioMar’s EMEA business, which includes production sites in Denmark, France, Spain, Greece, and Turkey, also reported reduced volume sales relative to Q3 2021. “The decline was a direct result of sales to Russia being discontinued in the first quarter of 2022, though the effect was partially offset by increased sales in the Mediterranean region. Earnings in the division remain impacted by the sharp increase in costs of raw materials and energy.”
The company’s LatAm segment, covering Latin American operations involving shrimp and fish species other than salmon, and factories in Ecuador and Costa Rica, reported year-on-year volume improvement. A strong sales effort saw increased sales with several major customers. “Accordingly, the good level of business activity had a favorable impact on division earnings.”
Developing shrimp feed market in Vietnam
The consolidated part of the Asia division, which only covers operations in Vietnam, is currently being developed through the implementation of a range of high-quality feed products. "The business operations have taken somewhat longer to establish, but the perspectives remain good, and the focus is now on penetrating the important market for shrimp feed in Vietnam in collaboration with the local business partner,” found the parent group’s report.
BioMar’s tech division, which was established after the acquisition of AQ1, is currently developing according to plan and with the expected positive contribution to profit, it added.
