BioMar earnings up in Q2, but company slightly lowers revenue guidance for 2023

Aarhus, Denmark-based aquaculture feed manufacturer BioMar reported slightly higher revenue and earnings in Q2 2023, but higher costs and prices drove down sales volumes.

According to an earnings report from BioMar’s parent company Schouw & Co., BioMar’s revenue increased 3 percent to DKK 4.18 billion (USD 611 million, EUR 560 million), up from DKK 4.05 billion (USD 592 million, EUR 543 million) in the same quarter of 2022. The company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) also increased slightly to DKK 266 million (USD 38 million, EUR 35 million), up from DKK 261 million (USD 38 million, EUR 35 million) in 2022. 

The increase in revenue, according to Schouw & Co., was related to higher selling prices – which reflected higher costs. Overall, the company said, Q2 saw a “higher degree of stability” compared to previous quarters thanks to the normalization of raw material supplies.

“Following a highly turbulent year in 2022 with quite substantial increases in costs of raw materials, energy, and freight, BioMar experienced more settled conditions in the first half of 2023,” the company said.

The revenue experienced negative impacts, the company said, due to changes in foreign exchange rates, which dragged totals down by DKK 260 million (USD 38 million, EUR 34 million). 

Earnings, meanwhile, reflected the improved balance between costs and selling prices for BioMar, Schouw & Co. stated. 

In volume terms, the company’s salmon division reported drops in volume sales, which it partially attributed to regulatory restrictions on aquaculture imposed in Chile, while volumes to Scotland and Australia improved.

“Overall revenue was in line with the year-earlier period,” Schouw & Co. said. “The division’s earnings fell slightly, partly as a result of increased prices of raw materials combined with negative exchange-rate effects.”

By location, BioMar’s EMEA division – supplying Europe, the Middle East, and Africa – kept its volume sales relative to Q2 2022 but posted an increase in revenue, which the company attributed to strengthened sales in the eastern Mediterranean region.

“Earnings improved relative to the second quarter of 2022 when business was impacted by the extremely volatile situation which arose after trade with Russia was discontinued,” Schouw & Co. said. 

BioMar halted all trade with Russia in March 2022 in the wake of the country’s invasion of Ukraine.

The company’s Latin American division, meanwhile, experienced both volume and revenue improvements, which it attributed to strengthened contract positions “in a market otherwise challenged by low prices on farmed shrimp.”

The Asian division is still “under development,” and while volume sales increased, earnings remain impacted by the cost of increasing the company’s market penetration, Schouw & Co. said.

Looking forward, the company said that long-term demand for BioMar’s products and farmed fish and shrimp is sound and that it is well-positioned in the aquaculture market. However, in the short term, demand for feed may be hit by current market conditions.

The global shrimp industry is facing softer demand, as high prices in the early part of 2023 shrank markets. The lower demand in turn led to a decrease in production.

“In shrimp farming, due to the short farming period relative to, say, salmon farming, demand for feed is easily affected by volume adjustments in farming operations,” Schouw & Co. said.

As a result of market pressures, the company revised the 2023 revenue guidance down slightly, predicting revenues of DKK 18 billion to DKK 18.5 billion (USD 2.6 billion to USD 2.7 billion, EUR 2.4 billion to EUR 2.48 billion). The prediction is down slightly from the DKK 18 billion to DKK 19 billion (USD 2.6 billion to USD 2.77 billion, EUR 2.4 billion to EUR 2.5 billion) the company predicted earlier.

The company’s EBITDA forecast, however, remains unchanged at DKK 1.08 billion to DKK 1.15 billion (USD 158 million to USD 168 million, EUR 145 million to EUR 154 million).

Photo courtesy of BioMar