BioMar has experienced “several delays” in its construction of a new fish feed factory in Wuxi, near Shanghai, China, it reported in its second-quarter financial results.
The factory, a joint venture between the Brande, Denmark-based company and 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.
“The factory is now expected to commence commercial production by the end of 2019, subject to receipt of the necessary regulatory approvals,” BioMar said. “It will have an annual capacity of 50,000 tonnes of fish feed. In combination with the existing factory in Guangdong Province, the new factory will provide a good basis for penetrating the Chinese market by providing sustainable and high-yielding quality feed for fish farming.”
BioMar said the delays have been caused in part due to “challenges in cooperating with the local contractor.” The postponement, along with lower earnings from Salmones Austral, a Chilean salmon-farming company which BioMar owns a 23 percent stake in, forced the company to lower its forecasted 2019 profit from its joint ventures from DKK 80 million (USD 11.9 million, EUR 10.7 million) to DKK 65 million (USD 9.7 million, EUR 8.7 million).
BioMar also gave an update on construction of its new feed factory in Tasmania, Australia, which it first announced in March 2017. The company has spent more than DKK 200 million (USD 29.7 million, EUR 26.8 million) on the project, with another DKK 100 million (USD14.8 million, EUR 13.4 million) more in expenses expected, it said.
“The project is progressing to plan, and BioMar expects the new facility will be ready in early 2020 with an annual fish feed capacity of about 110,000 [MT],” it announced.
Additionally, BioMar announced expansions of its aquafeed factories in Ecuador and Denmark. In Ecuador, the company has added production lines for pelleted feed and extruded feed, expanding its production capacity by a combined 65,000 MT of annual output. At its factory in Brande, Denmark, a new production line is being built that will be dedicated to “specialized larval and fry diets” and feed for recirculating aquaculture systems.
“When it becomes operational, the Brande facility will be BioMar’s largest feed facility for non-salmon markets,” the company said, adding that it expects it to come online by the end of the year.
BioMar also reiterated the importance of its purchase of Alitec Pargua, which it completed in June 2019. It said the buyout of the joint venture with AquaChile has given it “substantially more production capacity at its disposal in the strategically important Chilean market.”
“The company’s operations had been integrated with BioMar’s two other production units in Chile by the end of June,” it said. “BioMar believes the Chilean aquaculture industry offers a solid growth potential, and the acquisition enables the company to continue expanding in Chile.”
In the second quarter, BioMar expects to achieve an increase in its 2019 sales volume and higher-than-expected revenue – up to DKK 10.8 billion (USD 1.6 billion, EUR 1.5 billion) from a previously-announced forecast of DKK 10.3 billion (USD 1.5 billion, EUR 1.4 billion). It increased its guidance for its earnings before interest, tax, depreciation, and amortization (EBITDA) from a range of DKK 820 million to DKK 890 million (USD 121.9 million to USD 132.3 million, EUR 110 million to 119.4 million) to DKK 870 million to DKK 930 million (USD 129.2 million to USD 138.1 million, EUR 116.7 million to EUR 124.7 million).
“Demand for farmed fish and shrimp is generally developing well in many markets, and there are no immediate indications of any changes to this trend. The salmon market is expected to grow at a moderate pace in 2019 driven by generally good biological conditions, while the shrimp farming business in Ecuador is expected to accelerate growth,” it said.
