Aquaculture for all

AKVA Revenue Down 26 Per Cent

Biosecurity Economics

GENERAL - AKVA's 0perating revenue in 1Q was 152 MNOK, which is 26 per cent lower than the same period last year. Current general economic outlook together with the challenging fish health situation in Chile increases the uncertainty about the market development for the remainder of 2009.

The period's EBITDA was -3.3 MNOK primarily negatively affected by reduced revenues. The company says that sales volumes were heavily affected by low investment level in Chile and general restrictive investment policies throughout the salmon industry.

Cost reduction programmess have been implemented in Chile and Norway to adapt to lower sales volumes and strategic contracts have been won in Malaysia and Saudi Arabia, but the general market uncertainty has increased due to the global financial crisis.

"The continued challenging fish health situation in the Chilean market has created severe problems for the Chilean salmon industry. We do not expect to see a material improvement in the traditional business in this market for the next 2-4 years", saya an AKVA report. "Based on this development substantial cost reduction measures are being implemented in Chile."

"The governmental plan launched in November to counter the challenging sanitary situation has not yet been implemented, and consensus is now that the tasks will not be sufficient. The companies are generally in financial distress and incapable to execute necessary tasks. The coming transformation of the Chilean industry involves significant business opportunities for AKVA group in recirculation technology; however the development is expected to be pushed back into next year.

"The company will continue to meet the challenging situation by an uninterrupted cost reduction focus, protection of margins and reduced capital binding.

"The general underlying investment demand from the salmon farming industry in Norway and the UK remains relatively strong. Despite most companies making money, they are all focussing on reducing capital investment and working capital until the overall economic picture is clearer.

"The market outlook for recirculation smolt production facilities continue improving and is expected to lead to significant deliveries going forward."

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