Klepp, Norway-headquartered aquaculture technology company AKVA Group saw its revenues for the first quarter of 2024 fall 10 percent year over year to NOK 784 million (USD 71.8 million, EUR 66.8 million), with CEO Knut Nesse attributing the drop to “very low activity levels” in its land-based technology (LBT) business.
Delivering AKVA’s Q1 2024 results on 3 May, Nesse said the land-based market is slow right now and confirmed AKVA is not expecting to sign any significant recirculating aquaculture system (RAS) contracts during the entire first half of the year.
The country’s post-smolt market is also challenging to navigate due to Norway’s aquaculture resource tax in place, Nesse said, which has producers reluctant to place any large orders until they know its full implications. However, Nesse said he anticipated the issue should abate a bit in the closing six months of 2024.
Nesse said he expected the land-based sector to pick up in coming years due to the fact that Atlantic salmon supply is under pressure due as a result of challenging biological and fish health conditions.
“The big question is how and where that’s going to happen,” Nesse said.
Amid the challenging environment, the first quarter of the year started slow in terms of orders for AKVA but closed strong, Nesse said.
“That means we have a pretty strong momentum going into the second quarter,” he said.
The group received orders totaling NOK 917 million (USD 84 million, EUR 78.2 million) in the period, representing a year-over-year decrease of NOK 253 million (USD 23.2 million, EUR 21.6 million). The drop was aided by a strong order intake of NOK 800 million (USD 73.2 million, EUR 68.2 million) in its sea-based technology (SBT) segment, including the award of three new barges for the Nordic market with a total contract value of approximately NOK 160 million (USD 14.6 million, EUR 13.6 million).
Nesse said that no barges were ordered in 2023.
AKVA also recently inked a contract with Icelandic aquaculture company Laxey to implement the technology across the first of six grow-out modules planned for a site on Iceland’s Westman Islands, though the deal was finalized in Q2.
This delivery includes the design and installation of oxygenation and degassing systems and electrical systems, as well as project management and advisory services. Laxey’s long-term target is 27,000 metric tons (MT) of production capacity, including a post-smolt strategy serving sea-based farmers in the region.
“We also see some traction with post-smolt internationally – both in Canada and Chile – and we expect to see real development in China with regards to on-growing in the months to come,” Nesse said.
The company reported construction of Nordic Aqua Partners' facility in China is progressing, and that the facility in Ningbo, China, had a succesful first harvest.
AKVA will also look to tap further into the re-use market to further its momentum, Nesse said, through systems similar to flow-through, with a percentage of the water used and treated multiple times before discharge.
In Q1 2024, AKVA’s earnings before interest, taxes, depreciation, and amortization (EBITDA) increased NOK 8 million (USD 732,500, EUR 682,000) year over year to NOK 67 million (USD 6.1 million, EUR 5.7 million).
Revenues earned by AKVA's SBT segment in Q1 2024 totaled NOK 646 million (USD 59.1 million, EUR 55.1 million), down from NOK 655 million (USD 60 million, EUR 55.8 million) a year previously. Its EBITDA and EBIT ended at NOK 64 million (USD 5.9 million, EUR 5.5 million) and NOK 29 million (USD 2.7 million, EUR 2.5 million), respectively, up from NOK 55 million (USD 5 million, EUR 4.7 million) and NOK 19 million (USD 1.7 million, EUR 1.6 million) a year prior. SBT’s order intake was up NOK 187 million (USD 17.1 million, EUR 15.9 million) year over year.
AKVA's LBT segment revenue in the quarter amounted to NOK 101 million (USD 9.2 million, EUR 8.6 million) – down NOK 91 million (USD 8.3 million, EUR 7.8 million) year over year. The segment’s EBITDA and EBIT ended the period at losses of NOK 3 million (USD 274,700, EUR 256,000) and NOK 6 million (USD 549,40-, EUR 511,500), respectively, compared to a loss of NOK 2 million (USD 183,000, EUR 170,500) and NOK 5 million (USD 458,000, EUR 426,000) in Q1 2023. LBT’s order intake fell to NOK 72 million (USD 6.6 million, EUR 6.1 million) from NOK 527 million (USD 48.3 million, EUR 44.9 million) over the same period a year prior.
Revenues for AKVA’s Digital (DI) segment amounted to NOK 37 million (USD 3.4 million, EUR 3.2 million), which was NOK 10 million (USD 915,500, EUR 852,500) more than in Q1 2023. Its EBITDA represented earnings of NOK 6 million (USD 549,000, EUR 511,500), while its EBIT was a loss of NOK 3 million (USD 274,700, EUR 256,000), and its order intake climbed NOK 15 million (USD 1.4 million, EUR 1.3 million) year over year to NOK 45 million (USD 4.1 million, EUR 3.8 million).
For the year ahead, AKVA has revised its financial targets and expects to achieve minimum revenue growth of 5 percent to around NOK 3.6 billion (USD 329.6 million, EUR 306.9 million). The company, however, expects no growth in its LBT earnings. In terms of profitability, it’s guiding an EBIT increase of 4 percent to 5 percent in 2024 and a minimum of 6 percent in 2025.
