Akva Group increased turnover and operating profit in Q2
But new orders have been hard to find for land-based unit
Norway-headquartered fish farming supplier Akva Group delivered record high quarterly revenue of NOK 1.014 billion (£73.1 million) in the second quarter of 2024, up by 8% from the NOK 940m made in the same quarter last year.
Operating profit (EBIT) was NOK 63m, up from NOK 38m in Q2 2023, and EBITDA, another measure of profitability, increased to NOK 110m (NOK 86m).
However, the NOK 888m value of new orders in Q2 was less than half of that achieved in Q2 2023 (NOK 1.840bn) and came primarily from Akva’s Sea Based Technology (SBT) unit, which secured orders worth NOK 713m. The corresponding quarter last year had included orders worth NOK 1.062bn for the company’s Land Based Technology (LBT) unit.
Akva’s order book at the end of June 2024 was worth NOK 2.4bn, of which NOK 1.5bn is for LBT.
Resource tax
“The market for Land Based is still slow and Akva has not been awarded any new significant contracts so far in 2024. The outlook for the post-smolt market in Norway is still slow due to the (Norwegian) resource tax but is expected to improve gradually going forward,” said Akva in its Q2 report.
“The profitability in Land Based is still impacted by low activity level and to some extent closing of the NOAP (Nordic Aqua Partners in China) phase I project.”
Akva has a contract for phase 2 of the recirculating aquaculture system (RAS) salmon farm project in Ningbo, due to start in late 2024. Like phase 1, it will have a capacity of 4,000 tonnes per year.
Akva also has a contract for RAS provision for phase 3 (12,000 tonnes) but this is not included in the order book, as no date is set for construction.
Digital
Akva’s third business unit, Digital (DI), made revenue of NOK 35m (NOK 33m) in Q2, and had an operating loss of NOK 2m, the same as in Q2 2023.
“The Digital business segment has experienced great revenue growth the last few years, but the current cost base is still high compared to the activity level,” wrote Akva. “The profit margin in Digital is expected to improve following the acquisition of Observe.”
Akva already owned a third of UK-based technology business Observe and bought the rest of the business last month.
“The minimum purchase price for the 66.31% of the shares of £13.7 million, has partly been settled by cash consideration, and partly by way of a sellers’ credit that will be settled in instalments to be paid over the next three years,” AKVA said in a note about its financial statements.
“Furthermore, an additional consideration and earn out consideration up to a maximum total purchase price of £20.5 million will be paid if certain conditions are met. The cash amount paid by AKVA at closing has been financed by utilising options under AKVA’s existing bank financing.”
Nordic did best
In SBT, revenue in the Nordic region in Q2 was NOK 602m (NOK 475m) and order intake was NOK 524m (NOK 474m). In the Americas region (including Oceania), revenue was NOK 156m (NOK 158m), and order intake was NOK 151m (NOK 150m). Europe and Middle East (EME), which covers everywhere not in the Nordic and Americas regions, had a revenue of NOK 84m (NOK 100m) and order intake was NOK 37m (NOK 65m).
Second-quarter revenues for LBT were NOK 137m (NOK 174m) and it made an operating loss of NOK 4m, down from a loss of NOK 6m in Q2 2023.
