BioMar delivers expected growth, but warns of Norwegian market difficulties
The Denmark-headquartered BioMar Group achieved a “solid increase” in revenue and volumes last year, but – as was expected – its earnings failed to match the growth in volumes due to a fiercely competitive Norwegian market.
However, other markets were able to offset this challenging situation, the company said.
With earnings before interest, tax, depreciation and amortization (EBITDA) of DKK 713 million (USD 107.5 million, EUR 95.6 million), up DKK 1 million (USD 150,770, EUR 134,032) from 2017, BioMar reached the higher-end of the 2018 EBITDA guidance communicated in third-quarter.
Revenue grew 4 percent from 2017 to DKK 10.3 billion (USD 1.6 billion, EUR 1.4 billion), mainly due to a volume growth of 5 percent.
Carlos Diaz, CEO of BioMar, said that 2018 was “a challenging yet rewarding year” and that the company has not fully been living up to its expectations. Nevertheless, he believes that it has “leapt forward and created a solid foundation for sustainable business” on a global scale.
“Furthermore, we have during the last part of 2018 taken several initiatives to improve our competitive position in Norway through organizational changes and efficiency improvements, building upon our strong product portfolio within salmon," Diaz said. “Having said this, we believe the actual competitive conditions in Norway are not sustainable in terms of profitability. For the time being there is enough capacity in the market, but with the current market growth there will, in the near future be a need for new capacity investments. However, with the current return on invested capital in the market, it will be difficult to defend further investments.”
BioMar moved also into new markets and species in 2018, with Ecuador’s shrimp market welcoming the new products and services that followed its acquisition of Alimentsa.
“We continue to see possibilities for growth in Ecuador," Diaz said "That is why during 2018 we announced the investment in another line for pelletized feed as well as a line for extruded feed. The services and products we are delivering to the market position us as a preferred feed provider within the high-quality segment for shrimp feed in Latin Americas."
Meanwhile, its new companies in China and Turkey experienced increased volumes and earnings, despite a delay in the start-up of Wuxi factory.
Diaz said the company expects 2019’s revenue to be at the same level as last year but with increased earnings. It anticipates an EBITDA in the range of DKK 820 million (USD 123.6 million, EUR 109.9 million) to DKK 890 million (USD 134.2 million, EUR 119.3 million).
Also in 2019, it will be opening a second factory in China, expand into Australia, and introduce a third production line in Denmark.