AKVA Group Q1 results: strong activity despite challenging market

Egersund Net, part of AKVA Group, one of Europe’s leading suppliers of seine nets and services for the fish farming business. Photo: AKVA Group.
Egersund Net, part of AKVA Group, one of Europe’s leading suppliers of seine nets and services for the fish farming business. Photo: AKVA Group.

Leading aquaculture technology and services provider, AKVA Group, has reported strong activity in the first quarter of 2023, with revenue reaching NOK 874 million, marking a 3% increase from the same period last year. However, profitability in Q1 fell short of expectations due to high costs in the land-based business segment and an unfavorable product mix in the sea-based business segment.

Presenting AKVA's quarterly results this morning, CEO Knut Nesse said that AKVA's solid order backlog and financial position forms a good foundation for its organic growth strategy, although he also warned about challenges ahead.

"Personally, I've been in this industry for thirty years, and I've never seen more issues, more constraints on the different marketplaces, being in Chile, in Canada, or in Norway, with regards to growing the industry," Nesse said at this morning's press conference. "But that's the reality, and we have to respond to that."

Post-smolt market "on hold" until salmon tax is resolved, says CEO

Nesse noted that AKVA is still loss-making in its land-based segment, which he said is partly due to low gross margins in old contracts as well as higher costs. "Those old contracts will be finished for the third quarter in this year," he said, "but then we will have a fresh start."

The AKVA CEO said that he expected salmon prices will remain strong due to reduced supply, but that the company anticipates a continuing negative impact on its Norwegian post-smolt business due to the resource rent tax, sometimes referred to as the "salmon tax".

"The post-smolt facilities for AKVA group have shown excellent results, but the market for post-smolt has been put on hold, and it was already put on hold since the government's press conference on September 28," he said, referring to the date of the Norwegian government's original announcement of the controversial tax proposals.

China RAS contract boosts AKVA's results

AKVA Group's working capital as a percentage of 12 months rolling revenue is 8.2%, and cash and unused credit facilities amounted to NOK 629 million at the end of Q1. Total assets and total equity amounted to NOK 3,654 million and NOK 1,198 million respectively, resulting in an equity ratio of 32.8% at the end of 2023's first quarter.

AKVA has decided not to pay any dividend in the first half of 2023, but says its main objective is to maximize the return on investment made by its shareholders through increased share prices and dividend payments. The company's medium-term financial objectives remain unchanged, targeting a minimum of NOK 4 million in revenue and at least 8% EBIT for 2024.

Nesse highlighted AKVA Group's newly-awarded RAS contract for Nordic Aqua Partners (NOAP) as the largest contributor to its order intake, and said the company remains committed to its organic growth strategy despite the challenging market conditions.

AKVA had previously secured a contract for the first phase of construction of a 4,000-tonnes grow-out facility in Ningbo, China, where works are expected to be completed during Q3 of 2023. The new contract for the second phrase of construction is worth an additional EUR 40 million, Nesse said. "We will start work on the ground in China later this year," he confirmed.

About AKVA group

AKVA group is the world's largest supplier of solutions and services to global aquaculture. The company has 1 429 employees, offices in 11 countries and had a total turnover of NOK 3.4 billion in 2022. AKVA Group is a public listed company operating in one of the world's fastest growing industries and supplies everything from single components to complete installations, both for sea farming and land based aquaculture.

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