Tallinn, Estonia, 2016-08-19 16:00 CEST (GLOBE NEWSWIRE) --
Overview of the economic activities
Management commentary
PRFoods’ 2nd quarter and 6 months of 2016 results are in line with management expectations. The management is keeping its sales forecast for 2016 despite very volatile raw material prices. Although the 2nd quarter of 2016 revenue decreased by 14.7% and the 6 months of 2016 revenue by 8.0% in total compared to the same period in previous year, it is in accordance with our budget and company’s goal to exit lower margin products and certain Private Label products. Fish prices witnessed a very drastic increase in the first half of this year – compared to the beginning of the year, the price of salmon increased by 23.1% and the price of rainbow trout by 34.5%. Year-on-year, the price increase has been accordingly 62.8% and 42.5%. This affects negatively our margins in production and positively the performance of our fish farming operations. When the market price of raw fish increases, so does the value of fish harvested in fish farms of Group: the profit from the revaluation of fish livestock of 6 months of 2016 was 0.5 million euro which is by 1.3 million euro higher than the results of 6 months of 2015, while loss from the revaluation of fish livestock was -0.8 million euros. The 2nd quarter of 2016 result was 0.9 million euros in profit compared to the 0.2 million euros in profit a year ago. Considering that company still source the majority of raw material from third parties, the gross margin of the business was in decline, as the increase in the price of goods in retail happens with a significant delay. On a positive note, company’s cash flow from operations has improved and operating loss improved by 0.4 million euros, i.e. 70.0% in the first half of this year. The EBITDA for 6 months of 2016 was 0.4 million euros – an improvement of 0.5 million euros year-on-year.
A cause for concern is the continuing volatility of fish prices and the slow increase in processed goods in retail, which significantly influences our profitability. We are not satisfied with the decrease of gross marginality in our production. Our fish farming operations have improved in volume and efficiency, but not to the level that would compensate the increase in the price of sourced fish. At the same time, the forecast for the second half of 2016 shows a significant drop in fish prices: this is partly seasonal and secondly, there are signs that Norway, as a major supplier, will significantly increase the offered volume, as their farming volumes have increased.
We have launched the refreshing of our brand and the first new branded products will hit the shelves in 4th quarter, traditionally the busiest and most profitable season. Another positive note is that we have been able to diversify our sales more geographically and increase our sales outside of Finland. With a larger supply of fish, we could substantially increase our export to Japan.
PRFoods continues to be very strongly capitalised and has not taken any bank loans. The objective of the management is to improve return on equity, as well as optimize the debt-equity ratio of the company.
The 2nd quarter of 2016 compared to the 2nd quarter of 2015
- Unaudited consolidated revenue 9.8 million euros, decrease -1.7 million euros, i.e. -14.7%.
- Gross margin 6.3%, decrease -5.0 percentage points.
- Positive impact from revaluation of biological assets 0.9 million euros (2nd quarter 2015: positive impact of 0.2 million euros).
- EBITDA from operations -0.3 million euros, decrease -0.6 million euros.
- EBITDA 0.7 million euros, improvement 0.1 million euros, i.e. 19.3%.
- The operating profit 0.3 million euros, improvement 0.1 million euros, i.e. 28.3%.
- Net profit 0.04 million euros, decrease -0.2 million euros, i.e. -85.5%.
6 months of 2016 compared to 6 months of 2015
- Unaudited consolidated revenue 20.0 million euros, decrease -1.7 million euros, i.e. -8.0%.
- Gross margin 8.0%, decrease -3.7 percentage points.
- Positive impact from revaluation of biological assets 0.5 million euros (6 months 2015: negative impact of -0.8 million euros).
- EBITDA from operations -0.03 million euros, decrease -0.8 million euros.
- EBITDA 0.4 million euros, improvement 0.5 million euros.
- The operating loss -0.2 million euros, improvement 0.4 million euros, i.e. 70.0%.
- Net loss -0.4 million euros, decrease -0.2 million euros, i.e. 69.5%.
| KEY RATIOS | |||||||
| Income Statement, EUR mln | Q1 2016 | Q2 2016 | 6m 2016 | Q1 2015 | Q2 2015 | 6m 2015 | 12m 2015 |
| Sales | 10.2 | 9.8 | 20.0 | 10.3 | 11.4 | 21.7 | 50.3 |
| Gross profit | 1.0 | 0.6 | 1.6 | 1.3 | 1.3 | 2.5 | 6.8 |
| EBITDA from operations | 0.2 | -0.3 | -0.03 | 0.4 | 0.4 | 0.8 | 2.9 |
| EBITDA | -0.2 | 0.7 | 0.4 | -0.6 | 0.6 | -0.1 | 2.0 |
| EBIT | -0.5 | 0.3 | -0.2 | -0.9 | 0.3 | -0.6 | 0.9 |
| EBT | -0.6 | 0.2 | -0.3 | -0.8 | 0.3 | -0.4 | 1.1 |
| Net profit (-loss) | -0.5 | 0.04 | -0.4 | -0.5 | 0.3 | -0.2 | 1.2 |
| Gross margin | 9.5% | 6.3% | 8.0% | 12.2% | 11.3% | 11.7% | 13.5% |
| Operational EBITDA margin | 2.1% | -2.6% | -0.2% | 4.1% | 3.3% | 3.7% | 5.8% |
| EBITDA margin | -2.2% | 6.8% | 2.2% | -5.9% | 4.8% | -0.3% | 4.0% |
| EBIT margin | -5.2% | 3.6% | -0.9% | -8.6% | 2.4% | -2.8% | 1.7% |
| EBT margin | -5.5% | 2.3% | -1.7% | -7.4% | 2.9% | -2.0% | 2.1% |
| Net margin | -4.5% | 0.4% | -2.1% | -5.2% | 2.5% | -1.1% | 2.3% |
| Operating expense ratio | 10.5% | 12.7% | 11.6% | 11.3% | 11.3% | 11.3% | 10.8% |
| KEY RATIOS | |||||
| Balance Sheet, EUR mln | 31.03.2016 | 30.06.2016 | 31.03.2015 | 30.06.2015 | 31.12.2015 |
| Net debt | -3.1 | -1.4 | -3.3 | -6.5 | -0.6 |
| Equity | 22.7 | 22.7 | 33.1 | 33.3 | 23.2 |
| Working capital | 11.0 | 11.2 | 21.6 | 21.7 | 11.4 |
| Assets | 28.6 | 29.3 | 39.5 | 39.4 | 29.5 |
| Liquidity ratio | 3.7 | 3.4 | 5.5 | 5.9 | 3.7 |
| Equity ratio | 79.4% | 77.6% | 83.9% | 84.6% | 78.8% |
| Gearing ratio | -15.7% | -6.7% | -11.0% | -24.1% | -2.5% |
| Net debt-to-EBITDA | -1.1 | -0.7 | -11.2 | -8.2 | -0.2 |
| ROE | 4.5% | 3.6% | -3.2% | -3.9% | 4.1% |
| ROA | 3.7% | 2.9% | -2.1% | -2.6% | 3.4% |
Consolidated statement of financial position
| EUR '000 | 30.06.2016 | 30.06.2015 | 31.12.2015 |
| ASSETS | |||
| Cash and cash equivalents | 2,632 | 7,321 | 1,921 |
| Receivables and prepayments | 2,361 | 6,845 | 3,653 |
| Inventories | 5,125 | 7,027 | 5,616 |
| Biological assets | 5,786 | 4,850 | 4,421 |
| Total current assets | 15,904 | 26,043 | 15,611 |
| Deferred income tax | 136 | 103 | 138 |
| Long-term financial investments | 106 | 160 | 161 |
| Tangible fixed assets | 7,065 | 6,942 | 7,427 |
| Intangible assets | 6,080 | 6,185 | 6,128 |
| Total non-current assets | 13,387 | 13,390 | 13,854 |
| TOTAL ASSETS | 29,291 | 39,433 | 29,465 |
| EQUITY AND LIABILITIES | |||
| Loans and borrowings | 286 | 206 | 286 |
| Payables | 4,211 | 3,997 | 3,760 |
| Government grants | 162 | 182 | 177 |
| Total current liabilities | 4,659 | 4,385 | 4,223 |
| Loans and borrowings | 925 | 648 | 1,063 |
| Deferred tax liabilities | 337 | 265 | 252 |
| Government grants | 635 | 786 | 706 |
| Total non-current liabilities | 1,897 | 1,699 | 2,021 |
| TOTAL LIABILITIES | 6,556 | 6,084 | 6,244 |
| Share capital | 7,737 | 19,342 | 7,737 |
| Share premium | 14,007 | 16,026 | 16,026 |
| Treasury shares | -206 | -216 | -172 |
| Statutory capital reserve | 12 | 6 | 6 |
| Currency translation reserve | 441 | 466 | 471 |
| Retained profit (-loss) | 744 | -2,275 | -847 |
| TOTAL EQUITY | 22,735 | 33,349 | 23,221 |
| TOTAL EQUITY AND LIABILITIES | 29,291 | 39,433 | 29,465 |
Consolidated statement of profit or loss and other comprehensive income
| EUR '000 | Q2 2016 | Q2 2015 | 6m 2016 | 6m 2015 | 12m 2015 |
| Sales | 9,761 | 11,438 | 19,996 | 21,737 | 50,273 |
| Cost of goods sold | -9,146 | -10,150 | -18,404 | -19,194 | -43,509 |
| Gross profit | 615 | 1,288 | 1,592 | 2,543 | 6,764 |
| Operating expenses | -1,235 | -1,291 | -2,313 | -2,459 | -5,411 |
| Selling and distribution expenses | -789 | -954 | -1,555 | -1,792 | -4,033 |
| Administrative expenses | -446 | -337 | -758 | -667 | -1,378 |
| Other income/expenses | 59 | 96 | 71 | 151 | 406 |
| Fair value adjustment on biological assets | 910 | 179 | 466 | -849 | -888 |
| Operating profit (-loss) | 349 | 272 | -184 | -614 | 871 |
| Financial income | 1 | 81 | 1 | 229 | 303 |
| Financial expenses | -123 | -27 | -155 | -56 | -105 |
| Profit (-loss) before tax | 227 | 326 | -338 | -441 | 1,069 |
| Income tax | -185 | -36 | -84 | 192 | 110 |
| Net profit (-loss) for the period | 42 | 290 | -422 | -249 | 1,179 |
| Other comprehensive income (-loss) that may subsequently be classified to profit or loss: | |||||
| Foreign currency translation differences | -24 | 8 | -30 | 25 | 30 |
| Total comprehensive income (-expense) | 18 | 298 | -452 | -224 | 1,209 |
Indrek Kasela
AS PRFoods
Member of the Management Board
Phone: +372 6033 800
investor@prfoods.ee
www.prfoods.ee
