BioMar hits record earnings, though coronavirus delaying China factory construction
Brande, Denmark-based BioMar, a supplier of high-performance feed to the global aquaculture industry, recorded strong fourth-quarter results, increasing volume growth and notching an 11 percent increase in revenue.
Revenue in Q4 2019 reached DKK 3.13 billion (USD 475 million, EUR 419 million), while sales volume reached 337,000 metric tons (MT). For the year, robust sales from BioMar’s salmon division landed FY 2019 revenue at DKK 11.2 billion (USD 1.7 million, EUR 1.5 billion), up 8 percent over 2018. The company’s earnings before interest, tax, depreciation and amortization (EBITDA) reached DKK 966 million (USD 146 million, EUR 129 million) in 2019, up from DKK 713 million (USD 108 million, EUR 95 million) in 2018.
“BioMar had a good finish to the year and outperformed its guidance, which had already been raised twice during the year. Both revenue and volumes sold improved for the year, and reported EBITDA improved by more than was expected,” the company said in its earnings report. “Closing the year 2019, BioMar Group reports record revenue and earnings, reflecting increase in volumes sold and a stronger product offering. All three business divisions contribute to the positive development.”
One of the world’s largest manufacturers of quality feed for the aquaculture industry, BioMar produces feed for 45 different aquatic species, with its core business focusing on feed for salmon, trout, sea bass, sea bream, and shrimp.
The company said its new feed factory in Tasmania, Australia, “has progressed to schedule,” and will soon commence commercial production of an estimated 110,000 MT of feed per year. The investment cost the company around DKK 300 million (USD 45 million, EUR 40 million). BioMar also recently completed a project to increase the output capacity at its home facility in Brande, Denmark, with a new production line, at a cost of DKK 100 million (USD 15 million, EUR 13 million). The line is being used to produce specialized larval and fry diets and feed for recirculating aquaculture systems (RAS).
The outbreak of COVID-19 has further slowed progress on BioMar’s construction of a new fish feed factory in Wuxi, near Shanghai, China, it said. The factory, a joint venture with the Chengdu, China-based Tongwei Co. Ltd., will have an annual production capacity of 50,000 metric tons (MT) and is a centerpiece of the company’s strategic move to invest further in China. However, initial delays were reported in Q2 2019 due to issues with the local contractor, and the opening of the factory, expected in early 2020, has been postponed.
BioMar realized 8 percent higher revenue from its first full year of operating 100 percent of Alitec Pargua in Chile, a former joint venture with AquaChile that the company purchased outright in June 2019. in June 2019. Its full-year 2019 revenue from the factory was DKK 11.2 billion (USD 1.7 billion, EUR 1.5 billion), up from DKK 10.3 billion (USD 1.5 billion, EUR 1.3 billion) in 2018. The gains were the result of a 3 percent increase in volumes sold relative to 2018, higher average raw materials prices, and a stronger product offering, the company said.
Also in 2019, BioMar announced it plans to capacity to its facility in Ecaudor, installing a new product line of pelleted feed and a second for extruded feed, with a additional capacity of 40,000 MT annually. The investment will cost the company DKK 50 million and will be commissioned at the end of Q1 2020, it said.
“BioMar will defend its market share and consolidate its position by developing and implementing new products and maintaining its strong focus on optimizing margins, enhancing efficiency, and on customer communication,” it said in its results.
For 2020, BioMar predicted revenue around DKK 12 billion (USD 1.8 billion, EUR 1.6 billion) and profit in the range of DKK 1 billion to DKK 1.08 billion (USD 151 million to USD 164 million, EUR 133 million to EUR 144 million). The company said its main focus for 2020 will be to sustain growth in the Norwegian salmon market, expand its position in Ecuador and start up production of extruded shrimp feed there, bring the factories in Australia and China online, retain its strong position in the Mediterranean and Baltic regions, and to introduce new products, with a focus on products specifically for the RAS market.
“We are continuing our global growth strategy. We strongly believe in being locally agile at the same time using our global strength to innovate for the future. We have the privilege to be 100 percent dedicated to aquaculture,” BioMar CEO Carlos Diaz said. “I believe this will be an important differentiator in the future, enabling us to be agile in our customer collaboration and keeping the development of a sustainable and efficient industry as our main company purpose.”
BioMar also addressed accusations from Chile’s National Economic Prosecutor's Office it had worked with Skretting, EWOS, and Salmo Food to fix the prices of aquafeed in Chile between 2003 and 2015. In December 2019, the Chilean competition authority issued indictments to the four companies, requesting a maximum penalty for each of CLP 17.86 billion (USD 23.8 million, EUR 21.3 million).
“The charges are based on isolated circumstances related to the Chilean fish feed industry during the 2003-2015 period,” the company said. “The case, which is expected to be rather long-running, is still in the early stages, but BioMar Chile does not acknowledge the charges and the company intends to rebut the charges that it has participated in concerted practices so as to restrict competition in the industry.”
Diaz said BioMar’s financial performance was “a great achievement.”
“We have turned an ambitious strategy into tangible results,” he said. “We have during the last year expanded capacity and global presence. At the same time, we have gone through extensive structural and organizational changes. These initiatives are now filtering through to results in the shape of an ability to serve a broader customer base, better price/volume balance as well as a range of advanced product offerings. Furthermore, we have expanded our portfolio of products designed in collaboration with our customers, tailored to target the growing end-consumer segment of people ready to choose products with a strong profile related to sustainability and health-benefits.”
Photo courtesy of BioMar