August 29, 2022
Atlantic Sapphire's operational stability better, according to H1 2022 results
Atlantic Sapphire released its first half of 2022 results on August 26, indicating the company has narrowed its losses and improved its operational stability.
The company reported a loss on its earnings before interest and taxes (EBIT) of US$12.3 million on a revenue of US$9.6 million for the H1 period ending June 30, 2022. The company's net loss stood at US$14.4 million.
Atlantic Sapphire's losses for H1 2021 were US$51.5 million, and its EBIT was a loss of US$48.7 million on a revenue of US$10.8 million.
The reduction in the company's year-over-year losses was partially attributed to an insurance payoff. In September 2021 the company's Denmark-based Bluehouse facility was destroyed in a fire, for which the company later secured a US$25.3 million insurance settlement. The company said in its results statement it is still "reviewing its strategy for its Danish operations." The company also credited lower extraordinary mortality write-offs for the six months ending June 30, 2022, compared to the same period in 2021 for the decrease in losses.
On the production side, Atlantic Sapphire also indicated that its operations in the United States have "stabilised" after the company experienced biological challenges in 2021.
"From an operational standpoint, US phase-one conditions have stabilised after a long period of commissioning efforts and construction challenges, and we continue to see the importance of high smolt quality and avoiding stressors to ensure good biological results in the ongrowing stage of production," the company said.
Atlantic Sapphire acknowledged that its initial salmon batches exhibited "mixed biological performances," which it said was due to its Miami, Florida, US-based recirculating aquaculture system (RAS) facility was still being under construction, resulting in "unstable conditions with water quality and temperature fluctuations".
However, the salmon that were stocked while the facility was still under construction have all been harvested, and Atlantic Sapphire said it didn't expect those issues to continue now that the farm is fully operational.
"As of June 30, 2022, all initial batches were fully harvested out. Positively, the new batches introduced into the farm after mid-2020 have received a stable environment to thrive and grow in," the company said. "The new batches have outperformed the initial batches and are expected to bring the group into phase one steady state production in H2 2022."
Atlantic Sapphire also said its approach to construction has shifted as it starts phase two of its Miami RAS, working to optimise quality and total cost of the project.
In 2021, Atlantic Sapphire separated itself from RAS provider Billund Aquaculture and hired water treatment specialist Wharton-Smith as the project's general contractor and engineering firm Hazen & Sawyer to oversee design of the farm.
"In contrast to the US phase one project, we now have the appropriate staffing level for a large-scale project, we have strategically selected a design consultant with proven experience on large water facilities, and we have partnered with a construction contractor with vast experience in constructing water treatment facilities locally in Florida," Atlantic Sapphire said.
The company said the second phase of construction is expected to cost between US$275 million and US$300 million, but added that there is still the possibility the budget may shift due to ongoing work and the need to secure contracts.
"Given the current challenging construction environment with high and volatile raw material prices and long equipment and raw material lead times, the group is focused on value engineering and is working with its contractors to optimise cost and quality for outstanding phase two construction items," Atlantic Sapphire added.
The company also said it has completed financing of phase two through a private placement of approximately US$125 million and an additional term debt credit of US$98 million.
- SeafoodSource
