The Kingfish Company is working to intensify its sales efforts as the company neared a breakeven EBITDA and posted increased revenue and volumes sold in Q2 2024.
The Kats, Netherlands-based recirculating aquaculture system (RAS) yellowtail kingfish producer reported sales volumes of 512 metric tons (MT) in Q2 2024, up 36 percent from the 377 MT it posted in Q2 2023. The company’s revenue also increased, reaching EUR 7.3 million (USD 8.1 million), up 31 percent from the EUR 5.6 million (USD 6.2 million) it posted in Q2 2023.
Kingfish Company CEO Vincent Erenst said during a recent earnings call that the increased volume sold and revenue are in part thanks to the company’s intensified sales and marketing efforts, which it discussed in Q1 2024.
“We started new business with a number of foodservice distributors and retailers in Europe and North America, and we project to further increase these efforts and distributors during the remainder of the year,” Erenst said.
Erenst said the most important highlight for the company during the quarter was the sizes it sold. Large-sized yellowtail kingfish made up 53 percent of the company’s total volume in Q2 2024 – up from 37 percent of the total volume in Q2 2023.
“This shift to larger sizes goes hand in hand with a larger proportion of our volume being sold to foodservice, which demands larger sizes,” he said. “This over time, we believe, will allow us to further increase revenue per kilogram and our margins.”
Margins for the company in Q2 2024 were slightly improved, and the company’s operational EBIDTA per kilogram represented a loss of EUR 1.60 (USD 1.77) per kilogram – an improvement over the EUR 2.90 (USD 3.22) per kilogram it posted in Q2 2023. The company’s operational EBITDA continued to improve overall, reaching a loss of EUR 800,000 (USD 888,000), marking an improvement from the loss of EUR 1.1 million (USD 1.2 million) in Q2 2023.
Erenst said one of the things holding the company back from an EBITDA breakeven and profitability is high biomass. The standing biomass of the facility in Q2 2024 was 23 percent higher than it was in Q2 2023, reaching 1,075 MT – which is at capacity for the company’s facility.
“However, this level of biomass is higher than what we need for our current pace of harvest, and this has an effect on biological performance,” Erenst said.
The overall pace of growth has slowed as the company is forced to “keep a lid” on growth, he said, which has reduced biomass growth and also made for a worse feed-conversion ratio (FCR) on the fish. The FCR reached 1.47 in Q2 2024, up from 1.27 during Q2 2023.
“This is not a development we want, but it is the effect of keeping a lid on growth. However, we believe that as we ramp up our harvest in the coming quarter, we will reduce this figure again to values that we have had before,” Erenst said.
Kingfish Company CFO Jean-Charles Valette added that the increased FCR was partially offset by lower feed costs in the quarter.
“This is due not only to the market price for fishmeal and fish oil that are going down but also to the introduction of a new feed formulation in the farm that we've tested and started to implement about a year ago,” Valette said.
The strong biological performance is also expected to continue as the company shifts its focus to larger fish – which means Kingfish also needs to stock fewer juveniles than it did before.
“This allows us to stock only the very best fish, and this will enhance our biological performance,” Erenst said.
The successful farming operation and the need for higher sales are the main drivers of the company focusing its efforts on expanding its sales team, and Erenst said Kingfish Company will complete the expansion within the next two months.
“By then, our sales team will be almost twice the size it was before, and this should allow us to keep growing ourselves at a very significant pace, Erenst said.
“While sales have been slightly below our internal projections, we believe this is largely due to the fact that the market for this new premium species is still emerging," he said. "But, we are confident that as this market matures and combined with our increased marketing and sales efforts and investments, we will see strong growth going forward.”
Erenst also said that the company is slowly making progress on its planned farm in Jonesport, Maine, U.S.A. The company first announced plans to build a yellowtail kingfish facility in the U.S. in 2019, but numerous court cases have been delaying progress.
Erenst said that the company recently won another appeal in Maine courts, upholding the municipal permits it needs for the facility for a third time.
“This permit is now final; no further appeals are possible,” Erenst said. “However, we are still awaiting the outcome of a court challenge of our state permit, and we expect the result of that in the coming weeks or months.”
