AKVA posts a loss but order book grew in 2022

AKVA, the aquaculture technology and service group, saw its order book increase by around £40m last year – but it also recorded an accounting loss.

Presenting its annual report yesterday, AKVA said orders now stood at NOK 3,414bn (£262m) against NOK 2.890 bn (£222m) a year ago.

Revenues rose by 8% to NOK 3.376bn (£259m), but profitability was negatively affected by restructuring costs, which meant the group reported a loss of NOK 131m (£10m).

AKVA, which describes itself as the global market leader in solutions and services to the fish farming industry, said it entered 2022 with “optimism, a solid order backlog and an excited pipeline of new projects”. It is located in 11 countries including Scotland.

CEO Knut Nesse told shareholders that the business was hit by several cost-related headwinds during the year.

He said: “First, at the end of 2021 AKVA experienced somewhat challenging profit margins due to increasing costs from high inflation rates and global supply restrictions.

“This was further intensified during the first half of 2022 due to the war in Ukraine. Examples include increased freight rates, high energy prices and increased price level on raw materials and key components in general.

“During the first half year AKVA reported NOK 67m [£5.1m]in extraordinary costs related to the high inflation rates. In addition, one-time provisions of NOK 65m [£5m] were made on certain Sea Based and Land Based projects.

“AKVA implemented several mitigating measures to manage the challenging situation and the situation normalised somewhat in the second half of 2022.”

Turning to the thorny issue of tax, he added: “At the end of Q3 2022 the Norwegian government introduced a new resource tax.

“The implications from the resource tax are uncertain and an effective decision process is important for AKVA.

“In the short term the resource tax has a negative impact on the activity level in the post-smolt segment in Norway, and AKVA does not expect new investments in the post-smolt segment in Norway before the uncertainty related to the resource tax is concluded.

“The post-smolt market in Norway is a very important part of our organic growth strategy within the Land Based segment.”

During the third quarter last year, AKVA announced a cost saving program with an annual cost saving target of MNOK 100.

“This also include a restructuring of our Land Based business segment where the new blueprint organisation will be established at the headquarter at Klepp.

“The new organisation will then be located in the main marketplace for post-smolt and with same location as AKVA management, Sea Based and Digital organisations. Consequently, we will gradually downscale our organisation in Denmark.

“At the end of Q4 we reported that 70% of the cost saving target was achieved and the remaining 30% will be implemented gradually in 2023.

“Despite the cost-related headwinds and the introduction of new resource tax AKVA managed to maintain revenue growth on the back of a solid order backlog,” Nesse added.

Much of AKVA group’s Land Based operations in Denmark are due to transfer to Norway