Russian Aquaculture records higher sales, lower earnings in Q1

Russian Aquaculture, the largest fish-farming company in Russia, had a mixed start to 2021, with increased revenue but with a fall in profitability, according to its recently released, unaudited Q1 results.

Results were positive on the operations side, the company reported. Harvests were up by 26 percent compared to Q1 2020, while sales of finished products increased by 28 percent. 

The company's revenue, driven by higher sales, was up 12 percent year-on-year to RUB 3.9 billion (USD 53.8 million, EUR 45.2 million), but its average sales price was lower in Q1 compared to Q1 2020. That lower sales price drove down earnings overall.

Adjusted earnings before interest, taxes, debt, and amortization (EBITDA) was down 7 percent from the RUB 1.6 billion (USD 22.1 million, EUR 18.6 million) earned in Q1 2020 to RUB 1.5 billion (USD 20.2 million, EUR 16.9 million). The company's operating EBIT, meanwhile, decreased 11 percent from RUB 1.4 billion to RUB 1.25 billion (USD 19.1 to USD 17 million, EUR 16 million to EUR 14.3 million).

The company's net loss significantly improved, moving from RUB 335 million (USD 4.6 million, EUR 3.9 million) a year ago to RUB 82 million (USD 1.13 million, EUR 0.96 million) in Q1 2021. 

“The net loss for Q1 2021 was attributed to the seasonality of the business and was driven by a lack of brisk biomass growth in the winter,” the company said in a press release.

Russian Aquaculture has also been undertaking strategic investments to solidify its market presence. In Q1 2021, the company invested RUB 1.3 billion (USD 18 million, EUR 15.1 million), with the biggest share of the sum going towards the acquisition of a new feed barge, a dry-cargo vessel, and a large catamaran for service operations. 

The company is pursuing efforts to expand its business and grow its production capacity, it said. In January 2021, an agreement was signed for the use of a fish-farming area in Pitkov Bay with a capacity of up to 10,000 metric tons (MT) per cycle. In another move in April, the company won an auction for a site in Kislaya Bay with a capacity of 7,000 MT to 10,000 MT per cycle.

In May, Russian Aquaculture acquired a 60 percent stake in Murmanrybprom LLC and Tri Ruchya LLC, bringing its ownership stake in its processing plant to 100 percent.

“The availability of proven primary processing facilities is an important link in our business model and another step towards the implementation of our strategy to create the largest vertically integrated player in the aquaculture sector,” Russian Aquaculture CEO Ilya Sosnov said.

Atryom Mikhailin, an analyst at Veles Kapital investment company, said in his analysis of Russian Aquaculture’s Q1 results that he expects the company’s sales to increase by 2.3 times, and the turnover by 2.6 times through 2025, thanks to steady business development. For 2021, he said sales will increase by 64 percent to 2020, with EBITDA going up by 46 percent.

“We’re positive about the company’s prospects and recommend buying its shares,” he said. 

Shortly before the release of the financial results, Maxim Vorobyev, chairman of the board and the major owner of Russian Aquaculture, shared his views on the company’s future development with Interfax news agency. In his interview, he emphasized the company's movement toward more corporate transparency, as well as advanced environmental, social, and governance (ESG) practices. The company's desire for transparency is reflected in bringing more independent candidates to the nine-member board of directors, with six independent candidates. Five of the members nominated recently are new to the company. 

The new board can change the company’s strategy, Vorobyev said.

“Maybe more ambitious targets will be aimed, though it’s too early to talk about it,” he said. 

Vorobyev said the company will look to borrowing to finance its growth.

“We are considering all possible options to borrow, including an SPO,” he said.

Photo courtesy of Russian Aquaculture