Q1 had many things we can be satisfied with- our sales grew by 11.5% and group net loss decreased by 50%. Unfortunately, there are many things, that unearthed massive management mistakes in Finnish unit. All PRFoods current problems stem from management mistakes made in 2020-2021. As of toda, we have completed 100% the change of management and key people in Finland, that we started in summer and decision to close lossmaking Kokkola factory. These steps build base for renewal of profitability in 2022.
Corona crises speed up the unearthing of weaknesses in Finnish unit, and unfortunately the previous management did not want to acknowledge their mistakes or correct them. The proof that we are on right track with right people who joined us in fall this year, is the fact as of October we back to being profitable also in Finland: Heimon Kala Oy October EBITDA was 28 thousand euros and better by 270 thousand euros on YoY basis. Finnish unit caused liquidity crisis, which we are correcting with increased performance of our farming unit and cashflow released from biomass harvesting.
Thanks to the changes made to product portfolio and production by new Finnish management, we are out of all non-profitable products in Finland and have secured price and sales increases for next year in all categories. Considering the turbulent times in Finland, we aim to provide investors with regular updates from this unit.
Very well performed our UK unit, who despite some one-offs, fulfilled its EBITDA target in the sum of 172 thousand euros. Estonian EBITDA was still in minus by 150 thousand euros in Q1 due to loss-making Finnish sales.
The decline in Finnish management continued in summer, where instead of cutting loss-making production, they increased it, resulting in 880 thousand euros EBITDA loss.
Fish farming is making very good results in current quarter thanks to increased harvest volume and prices. Fish farming could even post a better EBITDA, but we delayed our Swedish harvest until Q1 2022 due to smaller biomass increase in hot summer. Considering that fresh fish prices are higher in winter, this decision has positive economic impact. At the same time this will decrease our cash flow from biomass in current quarter by 1.5 million euros, which will be deferred until Q1 2022.
We have followed our previously announced plan to emerge from this crisis:
- Decrease our bank loans: cash flow from financing was -1.5 million euros in Q1
- Restructure totally Finnish unit, including selling possibly or closing units or closing loss making units. Eliminating form Finnish sales all low margin products: target achieved by end of 2021.
- Increas retail sales in UK, EU and other domestic markets: target achieved in all markets, except Finland.
- Group’s strategic focus is on fish farming, as area that has been constantly profitable. Group’s target ist o achieve 10 thousand tons of biomass by 2023, which should give group sales of 40-50 million euros: Swedish farms should contribute already additional 1.500-1.700 tons of biomass by fall 2022.
Group’s financial position is not easy. At the same time, we must remember that 11 million euros bonds have been issued solely for refinancing of John Ross Jr. Acquisition and John Ross Jr results have not been impacted so severly, their operational cash flow is very strong and they pay regularly dividends to parent company, therefore we find their leverage to be acceptable.
Fish farming requires long term capital for fish feed and this is under works.
Last year we were forced to reduce significantly working capital financing through banks, which put strain on company’s finances. We have reduced significantly working capital needs in operations, also through lower inventory. Most important is to restore profitability in the environment of lower sales and restructure loss-making business units.
Having cut our teeth now for second year in corona crisis, we know that it is not sustainable to rely on outside help and all tough decisions need to be taken sooner than later. For our advantage the fish market has started much stronger this year and is more predictable and demand for our products is growing. The only objective of new financial year is profit and everything that blocks our road to profitabilty must be eliminated.
|mln EUR||3Q 2021||2Q 2021||1Q 2021||4Q 2020||3Q 2020||2Q 2020||1Q 2020||4Q 2019|
|EBITDA from operations||-0.8||-1.0||-0.5||0.6||-0.3||-0.1||0.0||2.1|
|Net profit (-loss)||-0.7||-1.7||-1.8||-0.2||-1.4||-1.3||-1.7||0.5|
|Operational EBITDA margin||-5.5%||-7.0%||-3.5%||3.4%||-2.6%||-0.9%||0.1%||8.4%|
|Operating expense ratio||16.3%||15.4%||15.6%||15.6%||18.2%||14.0%||14.3%||12.5%|
|Debt to total assets||0.7x||0.7x||0.7x||0.7x||0.7x||0.7x||0.6x|
|Net debt to EBITDA op||-14.3x||-16.9x||-55.3x||160.0x||12.8x||7.5x||5.3x|
|Cash and cash equivalents||748||1.091||2.500|
|Receivables and prepayments||3.231||3.232||3.512|
|Total current assets||17.363||18.492||16.498|
|Deferred income tax||38||54||38|
|Long-term financial investments||305||232||302|
|Tangible fixed assets||14.897||16.006||15.300|
|Total non-current assets||38.608||38.898||39.100|
|EQUITY AND LIABILITIES|
|Loans and borrowings||6.521||10.322||7.325|
|Total current liabilities||19.947||22.919||19.656|
|Loans and borrowings||18.411||12.261||17.561|
|Deferred tax liabilities||1.996||1.934||1.861|
|Total non-current liabilities||21.102||15.928||20.168|
|Statutory capital reserve||51||51||51|
|Currency translation reserve||447||-397||559|
|Retained profit (-loss)||-7.641||-3.056||-6.723|
|Equity attributable to parent||14.211||18.143||15.241|
|TOTAL EQUITY AND LIABILITIES||55.971||57.390||55.598|
|Thousand euros||3m 2021/2022||3m 2020/2021|
|Cost of goods sold||-13.433||-11.537|
|Selling and distribution expenses||-1.581||-1.558|
|Other income / expense||51||91|
|Fair value adjustment on biological assets||820||-94|
|Operating profit (loss)||-664||-1.125|
|Profit (loss) before tax||-648||-1.434|
|Net profit (loss) for the period||-740||-1.438|
|Net profit (loss) attributable to:|
|Owners of the company||-918||-1.402|
|Total net profit (loss)||-740||-1.438|
|Other omprehensive income (loss) that may subsequently be classified to profit or loss:|
|Foreign currency translation differences||-112||-31|
|Total comprehensive income (expense)||-852||-1.469|
|Total comprehensive income (expense) attributable to:|
|Owners of the Company||-842||-1.433|
|Total comprehensive income (expense) for the period||-852||-1.469|
|Profit (loss) per share (EUR)||-0.02||-0.04|
|Diluted profit (loss) per share (EUR)||-0.02||-0.04|
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