MANAGEMENT COMMENTARY
Second half of 2020 is characterized by continuation of COVID crisis. Salmon
prices are 12-year low and compared to the same period last year, salmon prices
are down 38% and rainbow trout is down by 22.5%. Adding to this global decrease
in demand due to shutdown of HoReCa and you can call the situation as ?perfect
storm". Companies who emerge from this crisis unscathed will be future winners.
Arrival of vaccines is giving hope that we can see some normalization during
2nd half of 2021. 2022 will definitely be more profitable year in Fish farming
as farmers can plan better the demand. Today's farming volumes were planned
before crisis and therefore there is massive oversupply in the market and most
Fish farmers operate either at loss or at break-even. John Ross Jr has shown
extraordinary resilience in current crisis and is forecasted to end current
financial year with similar result as to year before, gross margin of the
business has risen over 50%. Estonian operations and cost base has been adjusted
to the changed market situation. Unfortunately we cannot say the same about
Finland and we plan to carry out significant restructuring of Finnish business
during Q1.
The group ended Q4 already in profit, but due to significantly lower sales, our
operational EBITDA margin was 3.4% compared to 8.4% year before (consolidated
EBITDA margin 4.1% and 5.3% accordingly). Production cost base cannot be
adjusted to such drastic market changes without bigger restructuring. Yet we
have managed to decrease costs in Finnish unit by 75,000 euros per month from
beginning of the year and see further avenues for decreasing costs. At the same
time we cannot ignore the fact that sales need to be recovered, particularly in
Finland.
The focus in the beginning of the year is to adjust cost base to the market
situation, improving liquidity of the business and larger focus in Baltics and
Scandinavia on Fish farming which continues to be the most promising area in
business. John Ross Jr has adjusted extremely well to the crisis and despite
loss of some sales in first 6 months of current financial year, has increased
its profitability due to lower raw material prices.
Thanks to lower cost base, we believe, that we will finish 2020/2021 II half and
entire financial year with positive EBITDA.
KEY RATIOS
INCOME STATEMENT
+--------------+-------+-------+-------+-------+-------+-------+-------+-------+
|mln EUR |4Q 2020|3Q 2020|2Q 2020|1Q 2020|4Q 2019|3Q 2019|2Q 2019|1Q 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%|
+--------------+-------+-------+-------+-------+-------+-------+-------+-------+
|Operational | | | | | | | | |
|EBITDA 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%|
+--------------+-------+-------+-------+-------+-------+-------+-------+-------+
|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
+---------+----------+----------+----------+----------+----------+----------+----------+
|mln EUR |31.12.2020|30.09.2020|30.06.2020|31.03.2020|31.12.2019|30.09.2019|30.06.2019|
+---------+----------+----------+----------+----------+----------+----------+----------+
|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| | | | | | |
|ratio | 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%|
+---------+----------+----------+---------------------+----------+----------+----------+
|Gearing | | | | | | |
|ratio | 54.0%| 53.7%| 51.1% 44.0%| 43.3%| 46.6%| 48.3%|
+---------+----------+----------+---------------------+----------+----------+----------+
|Debt to | | | | | | |
|total | | | | | | |
|assets | 0.7x| 0.7x| 0.7x 0.6x| 0.6x| 0.6x| 0.7x|
+---------+----------+----------+---------------------+----------+----------+----------+
|Net debt | | | | | | |
|to EBITDA| | | | | | |
|op | 160.0x| 12.8x| 7.5x 5.3x| 5.3x| 5.4x| 5.1x|
+---------+----------+----------+---------------------+----------+----------+----------+
|ROE | -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
+---------------------------------+------------+------------+------------+
| Thousand euros | 31.12.2020 | 31.12.2019 | 30.06.2020 |
+---------------------------------+------------+------------+------------+
| ASSETS | | | |
+---------------------------------+------------+------------+------------+
| Cash and cash equivalents | 962 | 2 680 | 2 276 |
+---------------------------------+------------+------------+------------+
| Receivables and prepayments | 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 income 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 |
+---------------------------------+------------+------------+------------+
| | | | |
+---------------------------------+------------+------------+------------+
| EQUITY AND LIABILITIES | | | |
+---------------------------------+------------+------------+------------+
| Loans and borrowings | 9,634 | 12,505 | 10,611 |
+---------------------------------+------------+------------+------------+
| Payables | 12,469 | 13,301 | 11,132 |
+---------------------------------+------------+------------+------------+
| Government grants | 212 | 188 | 211 |
+---------------------------------+------------+------------+------------+
| Total current liabilities | 22,315 | 25,994 | 21,954 |
+---------------------------------+------------+------------+------------+
| | | | |
+---------------------------------+------------+------------+------------+
| Loans and borrowings | 13,254 | 7,945 | 12,368 |
+---------------------------------+------------+------------+------------+
| Payables | 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 LIABILITIES | 38,862 | 37,180 | 37,305 |
+---------------------------------+------------+------------+------------+
| | | | |
+---------------------------------+------------+------------+------------+
| Share capital | 7,737 | 7,737 | 7,737 |
+---------------------------------+------------+------------+------------+
| Share premium | 14,197 | 14,007 | 14,007 |
+---------------------------------+------------+------------+------------+
| Treasury 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 parent | 18,252 | 22,680 | 19,385 |
+---------------------------------+------------+------------+------------+
| Non-controlling interest | 392 | 633 | 434 |
+---------------------------------+------------+------------+------------+
| TOTAL EQUITY | 18,644 | 23,313 | 19,819 |
+---------------------------------+------------+------------+------------+
| TOTAL EQUITY AND LIABILITIES | 57,506 | 60,493 | 57,124 |
+---------------------------------+------------+------------+------------+
Consolidated Statement of Profit or Loss And Other Comprehensive Income
+--------------------+------------+------------+---------------+---------------+
|Thousand euros | | | 6 months| 6 months|
| |2Q 2020/2021|2Q 2019/2020| 2020/2021| 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 | | | | |
|expenses | -1,809| -2,146| -3,367| -3,938|
+--------------------+------------+------------+---------------+---------------+
|Administrative | | | | |
|expenses | -854| -1,023| -1,618| -1,829|
+--------------------+------------+------------+---------------+---------------+
|Other income / | | | | |
|expense | 46| 206| 137| 334|
+--------------------+------------+------------+---------------+---------------+
|Fair value | | | | |
|adjustment on | | | | |
|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: | | | | |
+--------------------+------------+------------+---------------+---------------+
|Owners of the | | | | |
|company | -190| 529| -1,592| 1,042|
+--------------------+------------+------------+---------------+---------------+
|Non-controlling | | | | |
|interests | -6| -33| -42| 24|
+--------------------+------------+------------+---------------+---------------+
|Total net profit | | | | |
|(loss) | -196| 496| -1,634| 1,066|
+--------------------+------------+------------+---------------+---------------+
| | | | | |
+--------------------+------------+------------+---------------+---------------+
|Other omprehensive | | | | |
|income (loss) that | | | | |
|may subsequently be | | | | |
|classified to profit| | | | |
|or loss: | | | | |
+--------------------+------------+------------+---------------+---------------+
|Foreign currency | | | | |
|translation | | | | |
|differences | 169| 66| 268| 381|
+--------------------+------------+------------+---------------+---------------+
|Total comprehensive | | | | |
|income (expense) | -27| 562| -1,366| 1,447|
+--------------------+------------+------------+---------------+---------------+
| | | | | |
+--------------------+------------+------------+---------------+---------------+
|Total comprehensive | | | | |
|income (expense) | | | | |
|attributable to: | | | | |
+--------------------+------------+------------+---------------+---------------+
|Owners of the | | | | |
|Company | -21| 595| -1,324| 1,423|
+--------------------+------------+------------+---------------+---------------+
|Non-controlling | | | | |
|interests | -6| -33| -42| 24|
+--------------------+------------+------------+---------------+---------------+
|Total comprehensive | | | | |
|income (expense) for| | | | |
|the period | -27| 562| -1,366| 1,447|
+--------------------+------------+------------+---------------+---------------+
| | | | | |
+--------------------+------------+------------+---------------+---------------+
|Profit (loss) per | | | | |
|share (EUR) | 0.00| 0.01| -0.04| 0.03|
+--------------------+------------+------------+---------------+---------------+
| | | | | |
+--------------------+------------+------------+---------------+---------------+
|Diluted profit | | | | |
|(loss) per share | | | | |
|(EUR) | 0.00| 0.01| -0.04| 0.03|
+--------------------+------------+------------+---------------+---------------+
Indrek Kasela
AS PRFoods
Member of the Management Board
Phone:+372 452 1470
investor@prfoods.ee
www.prfoods.ee
|