AKVA Group, a Norwegian technology provider to the aquaculture industry, announced its first quarter profit fell 26 percent on-year to NOK152.4 million.
Results were affected by a loss of NOK1.5 million related to a penalty for delays in a project. Depreciation and amortisation during the period amounted to NOK7.8 million.
Due to the reduced business volume in the first quarter, AKVA has introduced further cost reduction measures for both OPTECH and INTECH.
Operating revenues for OPTECH in the first quarter reached NOK72.9 million, while INTECH earned NOK79.5 million.
Operations in Chile were also downscaled to adapt to the prevailing situation. The Norwegian operations in INTECH continue to focus on achieving economies of scale benefits in the main production facility. Generally the market situation is challenging in the feed-barge market, while both OPTECH and INTECH face competitive pressure which reduce margins on achieved sales.
Sales volumes were heavily affected by low investment level in Chile and general restrictive investment policies throughout the salmon industry, and cost reduction programmes have been implemented in Chile and Norway to adapt to lower sales volumes.
The 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 continued challenging fish health situation in the Chilean market has created severe problems for the Chilean salmon industry, therefore AKVA is not expecting improvement in this market for the next two to four years.
Chile's 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 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 focusing 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.
The order backlog was NOK200 million at the end of the first quarter, down NOK173 million from the same period last year. The decline is mainly related to lower order inflow from the Norwegian and Chilean market resulting from the global financial crisis.
AKVA Group is a provider of technology to the global fish farming industry. Products consist of software systems, operational equipment and sensor systems, feed systems, cage systems, net cleaning systems, light systems and recirculation aquaculture systems.
US$1 = NOK 6.75378 (Apr 28)
