Aquaculture equipment provider AKVA Group reported record high activity and improved profitability in Q2 2023, and is coming out of the quarter with a record order backlog.
The Sømna, Norway-based company posted Q2 2023 revenues of NOK 940 million (USD 90.2 million, EUR 82.2 million), an increase of 4 percent compared to the same quarter of 2022. In addition to the increases in revenue, the company also posted a large jump in earnings before interest, taxes, depreciation, and amortization (EBITDA). The company’s Q2 2023 EBITDA reached NOK 86 million (USD 8.2 million, EUR 7.5 million), a significant increase from the NOK 3 million (USD 288,000, EUR 263,000) posted in Q2 2022.
Earnings before interest and taxes (EBIT), meanwhile, reached NOK 39 million (USD 3.7 million, EUR 3.4 million) in Q2 2023, a significant improvement compared to the loss of NOK 41 million (USD 3.9 million, EUR 3.5 million) in Q2 2022.
The quarter also featured “strong” order intakes, reaching NOK 1.8 billion (USD 172 million, EUR 157 million) – up from NOK 827 million (USD 79 million, EUR 72 million) in Q2 2022. The strong order intake has led to a record high order backlog for the company of NOK 2.88 billion (USD 276 million, EUR 252 million). That represents a 63 percent increase compared to the end of Q2 2022.
The company also netted a post smolt contract from Cermaq Norway worth an estimated minimum of EUR 60 million (USD 65 million).
To date, the company has seen a “strong order intake” in the first half of 2023. The company’s year-to-date order intake is NOK 3.01 billion (USD 288 million, EUR 263 million), up from NOK 1.87 billion (USD 179 million, EUR 163 million) in the same period of 2022.
“The activity in the first two quarters of 2023 were high and above last year,” AKVA said in a quarterly report.
Divided between the company’s three order categories – sea based, land based, and digital – land based has far and away seen the largest increases. The next-highest Q2 order intake for the land-based segment occurred in 2020, with NOK 235 million (USD 22 million, EUR 20 million) in orders. Q2 2023, meanwhile, saw NOK 1.06 billion (USD 101 million, EUR 92 million) in new orders, the largest in its history and the largest single-quarter order intake for any of the three divisions since 2020.
The high intake is good news, but there’s one caveat: Higher costs.
“The land based business segment is still impacted by a high cost base compared to current activity level and by lower profitability in parts of the project portfolio,” AKVA Group said. “The profit margins in this part of the project portfolio were written down significantly in Q2 and Q3 2022 mainly due to cost inflations and will run at a lower profit marg89in until completion end of Q3 2023.”
The company’s digital segment is also growing, and saw a record order intake of NOK 89 million (USD 8.5 million, EUR 7.8 million) in the quarter, compared to NOK 28 million (USD 2.7 million, EUR 2.4 million) in Q2 2022. The next-highest quarter for the segment in the company’s history is NOK 33 million (USD 3.1 million, EUR 2.9 million) in Q4 2022.
The sea based segment, meanwhile, had its worst Q2 since 2020 in terms of order intake. The segment saw an order intake in Q2 2023 of NOK 690 million (USD 66 million, EUR 60 million), compared to NOK 704 million (USD 67 million, EUR 61 million) last year – the next highest total on record. However, the profitability of the sea-based business segment saw positive impacts from product mix, and also saw the market breakthrough of deep sea farming concepts in the quarter – which generated sales of NOK 150 million (USD 14 million, EUR 13 million).
Looking forward, the company said the implications of a new resource tax on Norwegian salmon farms are still unclear.
“Most likely will the resource tax have a negative impact on activity level on short and medium term, especially within the post smolt market in Norway,” the company said.
The company said it plans to continue investing in all three of its business segments, and it is targeting a 6 to 8 percent EBIT in 2024 and a minimum of NOK 4 billion (USD 384 million, EUR 350 million) in revenue.
Photo courtesy of AKVA Group
