AS PRFOODS MANAGEMENT COMMENTARY
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
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
Thanks to the changes made to product portfolio and production by new Finnish management, we are out of all non-profitable products in
Very well performed our
The decline in Finnish management continued in summer, where instead of cutting loss-making production, they increased it, resulting in
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
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, exceptFinland . - 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
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.
KEY RATIOS
INCOME STATEMENT
| mln EUR | 3Q 2021 | 2Q 2021 | 1Q 2021 | 4Q 2020 | 3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 |
| Sales | 14.2 | 14.7 | 14.2 | 17.0 | 12.7 | 15.1 | 18.5 | 25.4 |
| Gross profit | 0.8 | 0.3 | 0.9 | 2.5 | 1.2 | 0.7 | 2.0 | 4.3 |
| EBITDA from operations | -0.8 | -1.0 | -0.5 | 0.6 | -0.3 | -0.1 | 0.0 | 2.1 |
| EBITDA | 0.0 | -0.7 | -0.7 | 0.7 | -0.5 | -0.1 | -0.9 | 1.4 |
| EBIT | -0.7 | -1.4 | -1.4 | 0.0 | -1.1 | -1.0 | -1.4 | 0.7 |
| EBT | -0.6 | -1.6 | -1.8 | -0.1 | -1.4 | -1.2 | -1.8 | 0.6 |
| Net profit (-loss) | -0.7 | -1.7 | -1.8 | -0.2 | -1.4 | -1.3 | -1.7 | 0.5 |
| Gross margin | 5.4% | 2.1% | 6.6% | 14.9% | 9.4% | 4.4% | 10.8% | 17.0% |
| Operational EBITDA margin | -5.5% | -7.0% | -3.5% | 3.4% | -2.6% | -0.9% | 0.1% | 8.4% |
| EBITDA margin | -0.1% | -4.8% | -5.3% | 4.1% | -3.8% | -0.5% | -4.6% | 5.3% |
| EBIT margin | -4.7% | -9.3% | -9.9% | 0.2% | -8.8% | -6.4% | -7.8% | 2.9% |
| EBT margin | -4.6% | -10.8% | -12.5% | -0.6% | -11.3% | -8.3% | -9.8% | 2.2% |
| Net margin | -5.2% | -11.6% | -12.5% | -1.2% | -11.3% | -8.4% | -9.2% | 2.0% |
| Operating expense ratio | 16.3% | 15.4% | 15.6% | 15.6% | 18.2% | 14.0% | 14.3% | 12.5% |
BALANCE SHEET
| mln EUR | |||||||
| Net debt | 24.2 | 20.9 | 21.4 | 21.9 | 21.5 | 20.7 | 17.0 |
| Equity | 14.9 | 15.8 | 17.6 | 18.6 | 18.5 | 19.8 | 21.6 |
| Working capital | -2.6 | -2.9 | -5.0 | -3.9 | -4.4 | -4.0 | -2.5 |
| Assets | 56.0 | 55.3 | 54.5 | 57.5 | 57.4 | 57.1 | 56.9 |
| Liquidity ratio | 0.9x | 0.9x | 0.8x | 0.8x | 0.8x | 0.8x | 0.9x |
| Equity ratio | 26.7% | 28.6% | 32.4% | 32.4% | 32.3% | 34.7% | 37.9% |
| Gearing ratio | 61.8% | 56.9% | 54.9% | 54.0% | 53.7% | 51.1% | 44.0% |
| 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 |
| ROE | -26.7% | -28.7% | -23.8% | -21.9% | -7.0% | -9.1% | -5.7% |
| ROA | -7.9% | -9.1% | -8.4% | -7.8% | -2.4% | -3.2% | -2.1% |
Consolidated Statement of Financial Position
| Thousand euros | |||
| ASSETS | |||
| Cash and cash equivalents | 748 | 1.091 | 2.500 |
| Receivables and prepayments | 3.231 | 3.232 | 3.512 |
| Inventories | 5.638 | 8.746 | 5.691 |
| Biological assets | 7.746 | 5.423 | 4.795 |
| 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 |
| Intangible assets | 23.368 | 22.606 | 23.460 |
| Total non-current assets | 38.608 | 38.898 | 39.100 |
| TOTAL ASSETS | 55.971 | 57.390 | 55.598 |
| EQUITY AND LIABILITIES | |||
| Loans and borrowings | 6.521 | 10.322 | 7.325 |
| Payables | 13.219 | 12.385 | 12.124 |
| Government grants | 207 | 212 | 207 |
| Total current liabilities | 19.947 | 22.919 | 19.656 |
| Loans and borrowings | 18.411 | 12.261 | 17.561 |
| Payables | 0 | 900 | 0 |
| Deferred tax liabilities | 1.996 | 1.934 | 1.861 |
| Government grants | 695 | 833 | 746 |
| Total non-current liabilities | 21.102 | 15.928 | 20.168 |
| TOTAL LIABILITIES | 41.049 | 38.847 | 39.824 |
| Share capital | 7.737 | 7.737 | 7.737 |
| Share premium | 14.007 | 14.198 | 14.007 |
| -390 | -390 | -390 | |
| 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 |
| Non-controlling interest | 711 | 400 | 533 |
| TOTAL EQUITY | 14.922 | 18.543 | 15.774 |
| TOTAL EQUITY AND LIABILITIES | 55.971 | 57.390 | 55.598 |
Consolidated Statement of Profit or Loss And Other Comprehensive Income
| Thousand euros | 3m 2021/2022 | 3m 2020/2021 |
| Sales | 14.207 | 12.737 |
| Cost of goods sold | -13.433 | -11.537 |
| Gross profit | 774 | 1.200 |
| Operating expenses | -2.309 | -2.322 |
| Selling and distribution expenses | -1.581 | -1.558 |
| Administrative expenses | -728 | -764 |
| Other income / expense | 51 | 91 |
| Fair value adjustment on biological assets | 820 | -94 |
| Operating profit (loss) | -664 | -1.125 |
| Financial income/-expenses | 16 | -309 |
| Profit (loss) before tax | -648 | -1.434 |
| Income tax | -92 | -4 |
| Net profit (loss) for the period | -740 | -1.438 |
| Net profit (loss) attributable to: | ||
| Owners of the company | -918 | -1.402 |
| Non-controlling interests | 178 | -36 |
| 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 |
| Non-controlling interests | -10 | -36 |
| 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 |
Indrek Kasela
Member of the Management Board
Phone:+372 452 1470
investor@prfoods.ee
www.prfoods.ee
Attachment
- PRF_interim_3m2021_2022
© OMX, source
