AS PRFoods unaudited consolidated interim report for the 2nd quarter and 6 months of fiscal year 2020/2021 Tallinn Stock Exchange: PRF1T

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MANAGEMENT COMMENT

The second half of 2020 is characterized by the continuation of the COVID crisis. Salmon prices have been low for 12 years and compared to the same period last year, salmon prices are down 38% and rainbow trout are down 22.5%. In addition to this overall decrease in demand due to the HoReCa shutdown, you can call the situation “perfect storm”. The companies that emerge from this crisis unscathed will be the future winners. The arrival of vaccines gives hope that we can see some normalization in the second half of 2021. 2022 will certainly be a more profitable year in fish farming because farmers can better plan demand. Today’s farm volumes were planned before the crisis and therefore there is a massive oversupply in the market and most fish farmers operate either at a loss or at breakeven. John Ross Jr has shown extraordinary resilience in the current crisis and is expected to end the current fiscal year with a similar result to the previous year, with the company’s gross margin increasing by more than 50%. Estonian activities and cost base have been adjusted to the new market situation. Unfortunately, the same cannot be said for Finland and we plan to carry out a major restructuring of the Finnish business in the first quarter.

The group has already finished the fourth quarter in profit, but due to a significant drop in sales, our operating EBITDA margin was 3.4% against 8.4% the previous year (consolidated EBITDA margin of 4.1% and 5.3% accordingly). The cost base of production cannot be adjusted to such drastic changes in the market without further restructuring. However, we have succeeded in reducing the costs in Finnish units by 75,000 euros per month from the beginning of the year and to see other avenues of cost reduction. At the same time, we cannot ignore the fact that sales must be recovered, especially in Finland.

At the start of the year, the focus is on adjusting the cost base to the market situation, improving the liquidity of the company and a greater concentration in the Baltic States and Scandinavia on fish farming, which remains the most promising area of ​​activity. John Ross Jr has adapted very well to the crisis and despite losing some sales in the first 6 months of the current fiscal year, he increased his profitability due to the fall in commodity prices.

Thanks to a lower cost base, we believe that we will end the half year and full year 2020/2021 II with a positive EBITDA.

KEY RATIOS

REVENUE STATEMENT

millions of euros 4th quarter 2020 3 quarter 2020 2 quarter 2020 1 quarter 2020 4th quarter 2019 3rd quarter 2019 2nd quarter 2019 Q1 2019
Sales 17.0 12.7 15.1 18.5 25.4 19.3 21.5 18.1
Gross profit 2.5 1.2 0.7 2.0 4.3 2.6 2.1 2.1
EBITDA from operations 0.6 -0.3 -0.4 0.0 2.1 0.7 0.3 0.2
EBITDA 0.7 -0.5 -0.4 -0.9 1.4 1.5 0.3 -0.5
EBIT 0.0 -1.1 -1.0 -1.4 0.7 1.0 -0.3 -1.0
EBT -0.1 -1.4 -1.2 -1.8 0.6 0.8 -0.4 -1.2
Net profit (-loss) -0.2 -1.4 -1.3 -1.7 0.5 0.6 -0.6 -1.2
Gross margin 14.9% 9.4% 4.6% 10.8% 17.0% 13.4% 9.8% 11.7%
EBITDA operating margin 3.4% -2.6% -2.6% 0.1% 8.4% 3.8% 1.4% 1.1%
EBITDA margin 4.1% -3.8% -2.6% -4.6% 5.3% 7.6% 1.4% -2.5%
EBIT margin 0.2% -8.8% -6.4% -7.8% 2.9% 5.0% -1.2% -5.6%
EBT margin -0.6% -11.3% -8.1% -9.8% 2.2% 3.9% -2.0% -6.5%
The net margin -1.2% -11.3% -8.4% -9.2% 2.0% 2.9% -3.0% -6.6%
Operating expense ratio 15.6% 18.2% 13.9% 14.3% 12.5% 13.4% 11.7% 14.1%

BALANCE SHEET

millions of euros 31.12.2020 30.09.2020 30.06.2020 03.31.2020 12/31/2019 30.09.2019 06/30/2019
Net debt 21.9 21.5 20.7 17.0 17.8 19.9 20.5
Equity 18.6 18.5 19.8 21.6 23.3 22.8 21.9
Working capital -3.9 -4.4 -4.0 -2.5 -3.5 -3.0 -3.1
Assets 57.5 57.4 57.1 56.9 60.5 62.4 62.5
Liquidity rate 0.8x 0.8x 0.8x 0.9x 0.9x 0.9x 0.9x
Equity ratio 32.4% 32.3% 34.7% 37.9% 38.5% 36.5% 35.0%
Gear ratio 54.0% 53.7% 51.1% 44.0% 43.3% 46.6% 48.3%
Debt / Total Assets 0.7x 0.7x 0.7x 0.6x 0.6x 0.6x 0.7x
Net debt on op EBITDA 160.0x 12.8x 7.5x 5.3x 5.3x 5.4x 5.1x
DEER -21.9% -7.0% -9.1% -5.7% -3.2% -4.5% -6.5%
ROA -7.8% -2.4% -3.2% -2.1% -1.2% -1.6% -2.3%

Consolidated statement of financial position

A thousand euros 31.12.2020 12/31/2019 30.06.2020
ASSETS
Cash and cash equivalents 962 2,680 2 276
Receivables and down payments 4,153 6,342 3,578
Inventories 9 627 9,104 7 884
Biological assets 3,702 4 354 4,249
Total current assets 18,444 22,480 17,987
Deferred tax 21 66 54
Long-term financial investments 232 217 232
Tangible fixed assets 15,968 14,444 16 179
Intangible assets 22,841 23 286 22,672
Total non-current assets 39,062 38,013 39,137
TOTAL ASSETS 57,506 60,493 57,124
LIABILITIES AND EQUITY
Loans and borrowing 9 634 12,505 10 611
Debts 12,469 13,301 11 132
Government grants 212 188 211
Total current liabilities 22,315 25,994 21 954
Loans and borrowing 13 254 7 945 12,368
Debts 596 190 190
Deferred tax liabilities 1,912 2,070 1,920
Government grants 785 981 873
Total non-current liabilities 16,547 11 186 15 351
TOTAL RESPONSIBILITIES 38,862 37 180 37 305
Share capital 7 737 7 737 7 737
Premium sharing 14,197 14,007 14,007
Own shares -390 -390 -390
Statutory capital reserve 51 51 51
Currency translation reserve -98 167 -366
Retained profit (-loss) -3 246 1,108 -1 654
Equity attributable to the parent company 18 252 22 680 19,385
Share of non-controlling shareholders 392 633 434
TOTAL EQUITY 18 644 23 313 19 819
TOTAL EQUITY AND LIABILITIES 57,506 60,493 57,124

Consolidated statement of net income and other comprehensive income

A thousand euros 2Q 2020/2021 2Q 2019/2020 6 months 2020/2021 6 months 2019/2020
Sales 17,029 25,374 29 766 44,703
Cost of goods sold -14,496 -21,049 -26,033 -37,796
Gross profit 2,533 4,325 3,733 6,907
Operating Expenses -2 663 -3,169 -4,985 -5 767
Selling and distribution costs -1809 -2 146 -3 367 -3 938
Administrative expenses -854 -1,023 -1 618 -1 829
Other income / expenses 46 206 137 334
Fair value adjustment of biological assets 118 -622 24 224
Operating profit (loss) 34 740 -1,091 1,698
Financial income / expenses -129 -190 -438 -393
Profit (loss) before tax -95 550 -1 529 1,305
Income tax -101 -54 -105 -239
Net profit (loss) for the period -196 496 -1 634 1,066
Net profit (loss) attributable to:
Company owners -190 529 -1 592 1,042
Non-majority interests -6 -33 -42 24
Total net profit (loss) -196 496 -1 634 1,066
Other items of comprehensive income that may subsequently be classified in income:
Foreign currency conversion differences 169 66 268 381
Total comprehensive income (expenses) -27 562 -1 366 1,447
Total comprehensive income attributable to:
Company owners -21 595 -1 324 1,423
Non-majority interests -6 -33 -42 24
Total comprehensive income for the period -27 562 -1 366 1,447
Earnings (loss) per share (EUR) 0.00 0.01 -0.04 0.03
Diluted earnings (loss) per share (EUR) 0.00 0.01 -0.04 0.03

Indrek Kasela

LIKE PRFoods

Member of the Management Board

Telephone: +372 452 1470

[email protected]

www.prfoods.ee



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