Sparkling half year results from Russian Aquaculture

RUSSIAN Aquaculture, one of the country’s leading producers of Atlantic salmon and trout, has announced a record performance for the six-month trading period to June 30 this year.

The comparison with the same period 12 months ago is indeed impressive, with revenue, profits and fish stocks all well up.

Increased sales and a favourable pricing environment enabled the company to achieve revenues of 4.8 billion rubles (RUB) (almost £59 million at the current conversion rate of 81 rubles to £1), compared with RUB 0.3 billion for the same period in 2018.

The adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) reached RUB 2.1 billion.

The operating profit was RUB 568 million compared with just ONE million rubles in the first half of last year, while the net profit came out at RUB 1,008 million (RUB 154 million in 2018).

Russian Aquaculture said in a statement: ‘As a result of annual stocking in 2017, 2018 and 2019, the company had three generations of fish in the water during the latest reporting period: juveniles from the current year, as well as commercial fish from the two preceding years.

‘The transition to annual stocking, monitoring of the full rearing cycle, the well-functioning organisation of feed supplies, and the successful development of our own sales system resulted in a considerable increase in sales to 9.6 thousand tonnes in H1 2019, compared with 0.8 thousand tonnes a year earlier.’

Russian Aquaculture’s core business areas include the commercial farming of Atlantic salmon and sea trout in the Murmansk region of the Barents Sea and the commercial farming of trout and the production of red caviar in lakes of the Republic of Karelia.

It says its main strategic focus is on growing its aquaculture business. The company currently owns cultivation rights for 34 sites for the farming of salmon and rainbow trout. The total potential production volume for these sites is around 50,000 tonnes of salmonids.

The half year report says this record performance results from the implementation of development plans announced in 2017 and makes the following points:

• In 2019, the company embarked on a path to profitable growth, while, at the same time, stocking juvenile fish, feeding fish, and catching and processing fish that had reached marketable weight;
• Transformation into a vertically integrated company with full control of all stages of the production, processing, and sale of fish;
• Increase in sales and market share in Russia’s recovering aquacultural red fish market;
• One of the best performing companies in the industry with an EBIT/kg of RUB 200/kg;
• Potential to increase production from 20,000 tonnes to 30–35,000 tonnes per year by 2025;
• Low leverage enabling it to raise funds for further development at a low cost.

The company also has a strategy for further growth, the key elements of which are an increase in its capacity for rearing juveniles and the acquisition of cages, new vessels, and additional hatcheries.

The volume of capital investments between January and June this year amounted to RUB 1.4 billion (around £49 million). The company is funding further investments of more than RUB 2.5 billion by the end of this year.

Russian Aquaculture CEO Ilya Sosnov said: ‘The first half of 2019 was an important milestone for our company. As we wrap up this reporting period, we have, in effect, three generations of fish in the water, that is, the full cycle.

‘Following our SPO (second public offering) in 2017, we attracted investments in order to carry out an extensive capital investment programme focused on transforming Russian Aquaculture into a vertically integrated business that controls every aspect of value creation: from raising our own juvenile fish, through the operation of cages and our own fleet, to direct sales.

‘Stable cash flow has enabled the company to invest in expanding its capacity to 30–35,000 tonnes of fish production per year by 2025.’

He added: ‘Moreover, the company already has the necessary hatcheries to achieve these plans. Globally, we see growing interest on the part of investors in aquaculture companies, which is accompanied by an increase in the market capitalisation of major players around the world.

‘The development of the Russian market for chilled red fish is only gaining momentum; we expect continued growth in demand for our products, which are unique in terms of their freshness and other features.’