BioMar raises its 2023 EBITDA expectations

Despite lowering its revenue expectations, the Q3 report reveals the company is poised to achieve record-high volumes and EBITDA for the year.
BioMar's Aquaculture Technology Centre at Hirtshals, Denmark. After Q3 results, the company has raised its EBITDA expectations for 2023.
BioMar's Aquaculture Technology Centre at Hirtshals, Denmark. After Q3 results, the company has raised its EBITDA expectations for 2023.BioMar.

BioMar ended Q3 2023 with a 5% year-on-year increase in sales volume, with positive contributions from all divisions. However, lower raw material prices in several categories and exchange rate developments kept revenues in line with the previous year. Despite this, and thanks to improved margins, EBITDA increased by 17%, a figure that has led the feed company to raise its expectations for the full year.

A record result in the history of BioMar

According to Schouw & Co. 2023 Interim Report EBITDA for BioMar Q3 2023 improved by a considerable margin to DKK 470 million from DKK 403 million in Q3 2022, reflecting margin improvements relative to last year. The feed company owner also said EBITDA for the 9M 2023 period amounted to DKK 853 million, a 19% year-on-year increase.

As a consequence of these strong results, the Denmark-based company has increased its earnings forecast to EBITDA in the DKK 1,150-1,190 million range from previously DKK 1,080- 1,150 million. At the same time, however, BioMar has also modified its revenue forecast for the 2023 financial year, this time to lower it from the previous DKK 18.0-18.5 billion to DKK 17.8-18.2 billion now.

As mentioned, in the third quarter the company recorded a 5% year-on-year increase in sales volume. Reported revenues reflected, among other things, a decline in raw material prices despite the current historically high prices for fish oil and fishmeal. As a result, the reported Q3 2023 revenue of DKK 5,814 million was only marginally up on last year.

In addition, exchange rate developments during the quarter had a negative impact on revenues of about DKK 450 million, mainly due to the weaker Norwegian krone. Total year-to-date revenue amounted to DKK 13,665 million, a year-on-year increase of 6%.

All in all, the company is more than satisfied with the results, as can be deduced from the words of its CEO, Carlos Díaz. "So far, we have experienced a very satisfying 2023. Building upon a solid first half year, we have accelerated our sales and improved the results, mainly due to our focus on developing the product offerings in the markets. We are looking at a very strong product pipeline with new concepts such as Blue Impact," he explained.

"This will be a record result in the history of BioMar," Díaz added after remarking that new EBITDA expectations for 2023 will be in the aforementioned range of DKK 1,150-1,190 million.

Positive contributions from all divisions

"I am proud of the engagement from our employees across the globe, which form the basis for turning a challenging year with volatile raw material prices into a success for BioMar and our customers," he added. The truth is the company has shown a positive contribution and solid results in all divisions during the third quarter of 2023.

Driven by the positive development of the Norwegian market, the Salmon Division recorded an improvement in sales volume in Q3. According to the quarterly report, the market momentum was supported by a broad product offering, and improvements in the Norwegian market contributed to strengthening the division's earnings.

For its part, the EMEA Division reported slightly lower sales volume than in Q3 2022, but also an increase in revenues driven by the markets in the Mediterranean region. In addition, earnings improved relative to the "volatile" third quarter of 2022.

Regarding the LatAm Division, it recorded substantial improvements in both sales volume and revenues. Profits improved thanks to the strengthening of contractual positions in a market that was nevertheless affected by low farmed shrimp prices.

Relative to the consolidated part of the Asia Division, it only covers operations in Vietnam and is still in the development phase. As a result, sales volume increased, but profits from these operations are still affected by the costs incurred for market creation.

Finally, the operations of the Technical Division, created following the acquisition of AQ1, recorded a slight decline in profits. "While there has been sound market interest in the technology solution, the division is experiencing that customers are to some extent holding back on their investments, as they are feeling the effects of currently low prices of farmed shrimp. This reluctance has also triggered destocking among distributors," notes the Schouw & Co. report.

Joint venture feed companies contribute significantly to the results

Beyond these divisions, BioMar also participates in not consolidated joint ventures (JV) and associated businesses. These include the Chilean fish farming company Salmones Austral and three smaller businesses, LetSea, ATC Patagonia, and LCL Shipping. All of them are recognized in the Q3 2023 consolidated financial statements at break-even, compared with a DKK 49 million profit after tax for the Q3 2022 period. The report attributes this considerable decrease largely to a fair value adjustment of the biomass in Salmones Austral.

About joint ventures, BioMar manufactures fish feed in China and Turkey through two 50/50 JVs with local partners. Both reported combined revenues of DKK 438 million (100% basis) and EBITDA of DKK 40 million in Q3 2023, compared to revenues of DKK 439 million and EBITDA of DKK 26 million in Q3 2022.

"On top of the strong growth in our consolidated companies, I am proud to see that our JV feed companies are contributing significantly to the results of the group," Carlos Díaz said about them. "Both in China and Turkey, we are in a good market position, and we have managed to increase volumes sold significantly. This enables us to be more efficient and brings us in a position where we can invest in building new products and open new market segments. I am confident, that we are entering into a positive cycle," concluded BioMar's CEO.

For the coming quarters, the company has set itself the key objective of bringing more stability and predictability to the feed market and, as far as possible, taking advantage of downward trends in raw material prices. In addition, BioMar will focus on meeting the company's sustainability ambitions, which are demanded by customers and consumers and therefore central to its long-term strategy.

Also, from a general perspective, the long-term demand for farmed fish and shrimp appears strong. "BioMar is well positioned in the market, with a high level of quality and a strong focus on sustainability and advanced fish and shrimp farming technology," the Schouw & Co. 2023 Interim Report says. However, the company acknowledges that, in the short term, feed demand is likely to be affected by current market conditions and the selling prices of farmed fish and shrimp.

About BioMar

Founded in 1878, BioMar is fully owned by the Danish conglomerate Schouw & Co. They are innovators in high-performance aquaculture feed creating a healthy and sustainable global aquaculture industry. Headquartered in Aarhus, Denmark, the company operates 17 feed factories across the globe and supplies feed worldwide to around 90 countries and for more than 45 different species.

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