Moscow, Russia-based aquaculture firm Russian Aquaculture nearly doubled its sales volume and revenue, according to its 2017 earnings report, but saw its operating profit and fair value gain on biological assets drop.
The company, which farms Atlantic salmon in the Barents Sea in Russia’s Murmansk region and lake trout in the Republic of Karelia, reported a 92.4 percent increase in its sales volume, reaching 10,221.8 metric tons for the year ending on 31 December, 2017. As a result, the company more than doubled its revenue, hitting RUB 5.02 billion (USD 80.6 million, EUR 65.1 million), with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rising 36.4 percent to RUB 2.06 billion (USD 33.1 million, EUR 26.7 million).
Russian Aquaculture’s operating EBIT per kilogram of its products sold – representing its production efficiency – was RUB 178.5 (USD 2.87, EUR 2.31) per kilogram, up 8.2 percent year-on-year and “in line with global leaders in the industry,” Russian Aquaculture CEO Ilya Sosnov said.
“2017 was a landmark year for the company: Strong operating cash flow and proceeds from SPO allowed us to significantly reduce net debt and increase equity capital,” Sosnov said.
The company has continued to direct most of its income towards reducing its debt levels, which at the end of 2016 stood at RUB 3.17 billion (USD 50.9 million, EUR 41.1 million), but by the end of 2017 had been lowered to RUB 742.4 million (USD 11.9 million, EUR 9.6 million). In addition, Russian Aquaculture restructured its debt portfolio to move its short-term loans into longer-term loans, reducing its weighted average effect interest rate on its loans from 9.02 percent to 5.37 percent year-over-year.
The company’s finances were aided by its secondary public offering, which raised nearly RUB 1 billion (USD 16.1 million, EUR 13 million). The move allowed primary stakeholder Maxim Vorobyov to increase his stake in the company to more than 47 percent.
In the release, the company said its core strategic focus is on growing its aquaculture business.
“The company’s long-term development strategy involves the creation of the largest vertically integrated player in the aquaculture market, including production of own fry, primary processing and distribution of the company’s own products,” it said.
Russian Aquaculture currently owns salmon and trout cultivation rights for 43 sites, with a total potential production volume for these sites estimated at around 50,000 metric tons. And it added to its total number of fish farms in 2017, winning the rights to five additional farms in the Barents Sea in 2017, “creating a base for further growth,” the company said.
The company also acquired two smolt plants in Norway, contributing to its transformation into a vertically integrated holding, and purchased an equity stake in Tri Ruchya, a fish processing company in the Murmansk Region. And it allocated more than RUB 470 million (USD 7.6 million, EUR 6.1 million) for the purchase of new production equipment.
However, the company reported it is expecting its performance in 2018 to be impacted by a lack of stocking in 2016, which it said was a one-off event, with full stocking accomplished in 2017 and more planned for 2018.
“The company’s ambitious plans for stocking in 2018 are already well underway, with contracts for the purchase and supply of fry and smolt already in place, and financed by more than 40 percent as of 31 December, 2017,” Russian Aquaculture said in a press release.
Photo courtesy of Russian Aquaculture
