Norway-based AKVA Group reported in its Q4 2022 results the company saw its full-year earnings before interest and taxes (EBIT) drop significantly in 2022 compared to 2021.
The company reported an EBIT loss of NOK 54 million (USD 5.3 million, EUR 4.9 million) in 2022, compared to a positive EBIT of NOK 120 million (USD 11.8 million, EUR 11 million) in 2021. However, according to AKVA, if the company’s “one time restructuring costs” of NOK 98 million (USD 9.6 million, EUR 9 million) are excluded from the results, the company saw a positive EBIT of NOK 42 million (USD 4.1 million, EUR 3.8 million).
The company added its profitability was negatively impacted by the aforementioned restructuring costs, as well as high inflation and “one-time cost provision.”
For Q4 2022, the company had revenue of NOK 779 million (USD 76.6 million, EUR 71.7 million), a decrease of 6 percent compared to Q4 2021. The company saw a decrease in its EBIT in Q4 – the company lost NOK 14 million (USD 1.3 million, EUR 1.2 million) in Q4 2021 compared to positive EBIT of NOK 19 million (USD 1.8 million, EUR 1.7 million) in Q4 2021.
Despite the drop in revenue and earnings, the company said it saw a strong order intake in Q4 2022, increasing from NOK 742 million (USD 73 million, EUR 68.3 million) in Q4 2021 to NOK 889 million (USD 87.4 million, EUR 81.9 million).
“We had a record high sea-based order intake of NOK 823 million [USD 81 million, EUR 75 million],” AKVA Group CEO Knut Nesse said during a presentation of the Q4 results. “I have to say that I’m really pleased with that, in light of the new proposed resource tax, which came 28 of September, so this was the first full quarter we had as a sort of test period to see whether the market was working as normal.”
The company said it faced “challenging profit margins” at the end of 2021 due to “higher inflation rates and global supply chain restrictions.” Those issues, it said, were further amplified in 2022 with the Russian invasion of Ukraine.
“Examples include increased freight rates, high energy prices and increase price levels on raw materials and key components in general,” the company said. “Furthermore, global instability impacted the net working capital and especially inventory levels. The increased inventory levels are partly related to higher price levels and partly to secure supplies for our production facilities and products.”
The company’s sea based segment was the main drag on its revenue in Q4 2022, as it saw a 9 percent decrease in Q4 2022 compared to the same quarter in 2021. Meanwhile, its digital and land based segments both saw increased revenue, increasing by 14 percent and 1 percent in 2022 compared to 2021, respectively. Those increases were not enough to offset the decrease in sea based, however, as the sea based segment makes up the majority of AKVA Group’s annual income.
Despite the increase revenue in the land based segment, revenue and profitability were a different story. Nesse called the profitability of the company’s land-based segment “unacceptable,” and the segment’s EBIT was a loss of NOK 28 million (USD 2.7 million, EUR 2.5 million). The company attributed the losses to “high cost base compared to activity level, and to challenging project margins.” The company said it has engaged cost saving initiatives, and that profitability should improve in Q1 2023.
The company is currently undergoing a restructure of its land based business, which Nesse said is going according to plan.
“The financial performance of land based is below expectations and not acceptable, that goes without saying,” he said. “We did a lot of work in the second half of the year to establish new principles and a new blueprint organizations, which will be established at our headquarters.”
As part of that effort, Nesse said, the company has undergone recruitment initiatives and is hiring new people to serve in the land based segment at its headquarters in the Stavanger/ Jæren region.
“We have relatively speaking good access to talent in that region,” he said.
The hiring is coinciding with a “downscaling” of its operations in Denmark due to high turnover of personnel.
“However we will still have some meaningful size back in Denmark, in particular related to design and engineering,” Nesse said.
Photo courtesy of AKVA Group
