Denmark-headquartered aquaculture feed supplier BioMar Group reported higher revenues and volume sales in Q1 2022, but its decision to suspend trading with Russia, the rising cost of energy, and raw material prices are impacting its earnings.
BioMar grew its first-quarter sales volume in Q1 2022 by 8 percent compared to Q1 2021, selling 288,000 metric tons (MT) of aquafeed products. Its revenue also grew 34 percent, to more than DKK 3 billion (USD 426.1 million, EUR 403.1 million) compared with the corresponding period of 2021.
However, the company said that its earnings were “significantly impacted” by a sharp increase in raw material prices and energy costs that have not yet been passed on to customers.
Earnings for Q1 also dropped due to a legal dispute in Norway and changed accounting policies for IT investments, the company said. As a result of multiple factors, BioMar reported Q1 2022 earnings before interest, taxes, depreciation, and amortization (EBITDA) of DKK 54 million (USD 7.7 million, EUR 7.3 million), compared with DKK 133 million (USD 18.9 million, EUR 17.9 million) in Q1 2021.
According to BioMar, the steep increase in prices on raw materials, freight, and energy is expected to continue and as a result the company lowered its guidance for 2022. At the same time, it comprised the risk related to suspending trade with Russia in its expected full-year results.
At the beginning of the year, the company expected its EBITDA to be in the DKK 980 to 1,040 million (USD 139.2 to 147.7 million, EUR 131.7 to 139.8 million) range. It now expects to generate full-year 2022 EBITDA in the range of DKK 890 to 940 million (USD 126.4 to 133.5 million, EUR 119.6 to 126.3 million).
BioMar announced in March it was withdrawing from the Russian market following the invasion of Ukraine, both in terms of sourcing materials from and selling feed to businesses in the country.
“Our [sales] in Russia [have] for years been a very important part of our business, especially for the BioMar units in Denmark and Norway. At the same time, we have sourced some of our key raw materials in the area now affected by the conflict. However, our customers must be able to rely on us as a business partner with high ethical standards,” BioMar CEO Carlos Diaz said. “The decision will take its toll at BioMar, but we are a part of society, and we need to take responsibility. My only concern – and surprise – is that some of our international competitors have not taken the same position, but rather, [are] taking advantage of the situation. But even knowing this, we would have taken the same decision, since it is the right thing to do. This is not a food crisis for the people in Russia, but a humanitarian crisis for the people in Ukraine.”
Photo courtesy of BioMar
