Earnings call transcript: Aker Biomarine AS Q2 2025 sees 12% revenue growth

Aker Biomarine AS reported a robust second quarter of 2025 with a 12% year-over-year increase in revenue, reaching $55.3 million. The company’s stock saw a slight decline of 0.82% to $85.1, reflecting investor caution despite strong earnings. The company posted an adjusted EBITDA improvement of 41%, driven by growth in its Human Health Ingredients and Consumer Health Products segments. According to InvestingPro data, the company has delivered an impressive 71.92% return over the past year, though current trading multiples suggest the stock may be overvalued relative to its Fair Value.

Key Takeaways

• Revenue increased by 12% year-over-year, reaching $55.3 million.
• Adjusted EBITDA rose by 41%, indicating improved operational efficiency.
• The stock price decreased by 0.82%, closing at $85.1.
• Aker Biomarine’s diversification strategy continues to mitigate customer concentration risks.
• The company completed restructuring efforts in Houston and Oslo.

Company Performance

Aker Biomarine AS demonstrated strong performance in Q2 2025, with a significant improvement in revenue and EBITDA. The Human Health Ingredients segment led the growth, posting a 15% increase in revenue, while Consumer Health Products grew by 9%. The Emerging Business segment remained stable. The company’s strategic initiatives, including product rollouts and market expansion, have contributed to its robust performance, positioning it well against industry competitors.

Financial Highlights

• Revenue: $55.3 million (12% growth YoY)
• Adjusted EBITDA: $13.6 million (41% improvement)
• Human Health Ingredients revenue: $29.2 million (15% growth)
• Consumer Health Products revenue: $27.1 million (9% growth)

Outlook & Guidance

Aker Biomarine continues to forecast stable revenue for its Human Health Ingredients segment in Q3, with modest growth expected in Consumer Health. The company is targeting an annual price inflation of 3% and anticipates the European approval of LucerVeta in September 2026. Capital expenditures for the year are projected between $6 million and $8 million, focusing on process improvements in the algae business. InvestingPro analysis indicates net income is expected to grow this year, though analysts do not anticipate profitability in the current fiscal year. The company maintains a moderate debt level with a debt-to-equity ratio of 1.22.

Executive Commentary

CEO Mats Jansen emphasized the company’s growth trajectory: "We are expecting to continue to grow, continue to improve our business." He also highlighted the impact of growth on profitability, stating, "For every 5% growth we have from today’s level, we’ll add another $4 million of EBITDA."

Risks and Challenges

• Potential delays in regulatory approvals could impact product launches.
• Market volatility and economic pressures could affect consumer spending.
• Supply chain disruptions may pose operational challenges.
• Price inflation could impact cost structures and profitability.
• Competition in the health ingredients sector remains intense.

Aker Biomarine AS remains committed to its growth strategy, leveraging its diversified product portfolio and strong market presence to navigate potential challenges and capitalize on new opportunities. For comprehensive analysis including detailed financial metrics, growth projections, and expert insights, access the full Pro Research Report available exclusively on InvestingPro.

Full transcript - Aker Biomarine AS (AKBM) Q2 2025:

Mats Jansen, CEO, Akerbia Mining: Good morning, and welcome to Presentation of Akerbia Mining’s Highlights and Financials for the Second Quarter twenty twenty five, where myself, Mats Jansen, the CEO and the CFO, Kathreine Klauwnes, will take you through today’s presentation. After we are presented, we will host a Q and A session, and you can already now start to send in questions to irarkbmarin dot com. The second quarter now is the ninth quarter in the row, and I can stand here and say that we are delivering growth for the company as a whole. We delivered 12% growth over the same quarter last year at $55,300,000 and improved EBITDA 41%, up to $13,600,000 EBITDA. It was driven by good performance in our main two segments, Human Health Ingredients that delivered 15% growth to $29,200,000 of revenue and $13,900,000 of EBITDA, up 28% from the same quarter last year.

Also Consumer Health Products delivered well in the quarter, dollars 27,100,000.0 of revenue, 9% up compared to the same quarter last year and $1,600,000 of EBITDA. Emerging business, which mainly is the core business, stable quarter over quarter and negative $400,000 a slight improvement from the previous quarter and on a path to breakeven. You can see the history of our numbers, growth in all the quarters coming forward and especially strong second quarter twenty twenty five. Very pleased with the results, especially driven by strong Human Health Ingredients performance. And you can see the corresponding EBITDA on the right side impacted both by this operation leverage when we get top line growth, the bottom line growth much faster.

And also our cost of goods and margins are starting to improve quite significantly now, hitting well on the EBITDA. Moving into each of the segments, starting with Human Health Ingredient. We delivered in total $29,200,000 of revenue along the segment as a whole and delivered $26,200,000 for the Krill Oil business where we have all our margin. Good growth in every single region, but especially strong in China as we have seen in the previous quarters and also in Asia Pac driven by Australia, which is very good to see given that Australia being a market where we have been, let’s say, stagnating the last couple of quarters. Big improvement of EBITDA, dollars 13,900,000.0 in the quarter and run rate now almost $56,000,000 of EBITDA coming from more volumes, better prices and also improved cost of goods.

So overall, better margins. Combination of both of those two things drives that EBITDA quite significantly. LucerVeta is a key focus for us these days. We are rolling it out in the markets, starting in The U. S.

Market, but now also in Asia. And we have signed an exclusive commercial arrangement with a partner for the Southeast Asian region that will start to roll this out in the first markets where we have the regulatory approval to roll the product out. We talked about before that the first half of the year have been problematic for Alger. We had some production challenges in Houston. The quality of the product wasn’t up to par.

We have identified the root causes. We have designed solutions and we are now implementing those, let’s call it, new processes in the Houston process during August. We’re investing about 5,000,000 in CapEx to make those improvements, and we’re getting ready to for a relaunch of our algae position at the August. Last quarter, we talked about restructuring that we were doing, building down resources in Oslo and building up resources in Houston, creating a center of excellence around our products around the Houston manufacturing side. That is now complete.

So we have filled all the roles we were going to fill in Houston and have great competent people in all those positions over there and also a new leader for the whole Houston site and operation, which also started in the company during the quarter. We have done some restructuring of our cost base, moving some costs out of cost of goods and inventory and over to SG and A. That principle is now more in line with how it should be. And we have done updates in the comparables backwards to also reflect that. So that’s why you might not see exactly the same numbers here when you see the quarters on the EBITDA going backward.

But it is to state more correct numbers for the business. 48% of EBITDA margin for Human Health Ingredients, I think, close to that 50% threshold. A few more words about Human Health Ingredients. It’s been a big transformation from when we launched the turnaround in 2022 to where we are today, almost double sales during that period. And we have now a much more robust customer platform than what we had in our previous peak.

We’re almost back to the all time high that we had in 2020 when Korea represented 25% of our wholesale. As you know, Korea is not here anymore, and we have built up other businesses more robust in other markets. And you can see that on the chart on the screen now, both looking at customer concentration. We have no customers more than 10% of our total revenue compared to in 2020, where Korea and our one customer there was really, really dominant. And you can also see the regional split on the right side, much more healthy now and a good spread between U.

S, Europe, Asia and China. So a very robust customer base here that are making us much more secured for similar changes that we saw in that happened in Korea back then. Korea are planning a launch after the summer. They are in preparation for that. So hopefully, when we report next quarter, we can give some feedback from how that launch has done.

In the previous quarters, I presented a path from where we were, I think it’s like three quarters ago, to an EBITDA run rate of $60,000,000 As you can see now, we’re already at between $55,000,000 and $56,000,000 of run rate. So we already covered a quite big part of that journey. And I think the important message for us to say it’s not stopping at that $60,000,000 EBITDA target. We are expecting to continue to grow, continue to improve our business, launch innovations, drive price and continue that journey beyond those $60,000,000 We have this operational leverage in our business, meaning that the bottom line grows faster than the top line. And you can see it illustrated on the slide here now.

For every 5% growth we have from today’s level, we’ll add another $4,000,000 of EBITDA. So if you have 10%, you get 8%. If you have 15% growth, you get $12,000,000 of improved EBITDA. Then we’re working on driving prices up. We did a test in the beginning of this year to do inflation adjustment of some of our customers, and that went well.

And going forward, we will continue to do that on an annual basis. But also the mix of both products with LucerVerta, which is a more premium product coming in, and the customer base, we expect also prices to continue to grow. Then innovations, that’s where we have Algae business, the LuciVeta business, the PL plus products. It takes always some time at the beginning to get that kind of a critical mass of customers, but these are all very promising products that will deliver good EBITDA to our business going forward. We will have some inflations in our cost base as well in the years to come, illustrated at all the way to the end here at the waterfall.

We’ll try to combat some of that by improvement programs. And we might also invest in some more resources connected to commercialization of especially those innovations going forward. So the growth case is still intact. It’s to get that operational leverage out, continue to grow it, drive price upwards, drive those innovations and then use our existing kind of platform to drive new innovations just like this algae product that we talked about. Moving into Consumer Health Products, 9% growth.

We are now out of this kind of inventory adjustment situation that we’ve been experiencing for a while on the Consumer Health Products, meaning that retailers took down their inventory levels. Typically, will stay at about ten weeks. Lately, there’s more around five. That’s kind of cycled through now. And our sales more represent directly what we are selling from the stores out to consumers.

9% is on the high level. We have said single digit growth to be expected in this segment. So this is, I guess, as high as you get, still within single digit, but good performance for Lang in the quarter. And you see the EBITDA coming up also. There’s some operational leverage coming out of this business as well.

So continuing and delivering as planned on the Consumer Health products, and we expect it to do so going forward as well. On emerging business, this now represents revenues from Cori. You can see the quarterly sales numbers being stable, dollars 2,100,000.0 a quarter, but improving EBITDA, negative $400,000 on a good path towards that breakeven point. That breakeven point, we achieved through a combination of pulling down on some marketing investments, really prioritizing marketing that really pays off in the return on investment calculations we do and also being diligent about cost and our operation to get that cost down. And once we have that under control, we’ll start to focus on growing that business profitable after that.

We’re also now launching out the second generation of Cori, something called Cori XL, and that is basically our Boost product. So there’s a new version of Kory being rolled out in retail as we speak, just bringing innovation and new SKUs into the space. And with that, I’m going to give the word to Katrina and Clavnes that will take us through the financials.

Kathreine Klauwnes, CFO, Akerbia Mining: Good morning. Here is the financial update for the second quarter. Q2 is a solid quarter, both in terms of top line growth and improved margins. Starting with a quick run through the P and L. All 2024 figures are restated to compare with the new cost allocation that I will explain in more detail on the next page.

Sales for the group is up 12% from second quarter last year, driven by strong growth in Human Health of 15% and also Consumer Health delivers a good quarter at 9% growth. COGS is stable despite high sales as prices on Superba are up. Also the internal elimination between the segments are positive this quarter, reducing the COGS compared to Q2 last year with almost $2,000,000 Other operating income includes the TSA revenues from Aker Quill Company. The TSA is now terminated for all services with exceptions of IT that will run to the end of Q3. Net profit includes an impairment of the protein plant in Q3 of $15,000,000 to reflect uncertainty related to tariffs and the macroeconomic environment.

Adjustments in the quarter includes costs related mainly to the restructuring program and IT migration costs for the Feed Ingredients transaction. Adjusted EBITDA for the quarter is $13,600,000 up from $9,600,000 Q2 last year. As part of the Feed Ingredient transaction, a thorough review of cost and cost allocation has been completed to reflect a more correct presentation of costs. As a result, certain cost items in Houston previously booked to inventory has been reclassified as SG and A expenses to show a more representative view on production related costs. This includes part of salaries, insurance and warehouse rent.

The effect is a decrease in production unit cost and COGS compensated by an increase in SG and A. About $7,000,000 on an annual basis have been reallocated from COGS to SG and A, resulting in margin uptick of 6% to 7% on all Houston products. Out of the $7,000,000 in 2024, dollars 6,300,000.0 increases SG and A in the Human Health segment, while $700,000 has been shifted to SG and A in Corporate. All 2024 figures have been restated to reflect this new cost allocation. In the Corporate segment, SG and A has increased from $1,400,000 in Q2 last year to $6,900,000 this quarter.

However, a few comments linked to this. First, SG and A is impacted by restructuring costs, including severance packages and IT migration costs for AcuC. These are adjusted out in the bottom graph at $3,700,000 this quarter, while only $1,200,000 were adjusted out last year second quarter. Second, cost related to transactional service agreements is booked here as part of the SG and A of about $200,000 but this is offset by TSA revenue booked under other operating income. Third, also last year, the full second quarter year to date effect of corporate costs that had to be allocated to feed was booked in Q2 as a catch up effect, lowering Q2 SG and A figures last year.

Looking at the EBITDA development, internal elimination between the segments yields a positive $2,000,000 delta second quarter this year. This leads to negative adjusted EBITDA of $1,600,000 for the Corporate segment in the quarter, down from negative $1,000,000 Q2 last year. Total change in net working capital is $12,000,000 mainly related to higher accounts payable as a result purchase of the Nutramil from Aker Quill Company in the quarter. This also increases inventory, but is partly offset by the new cost allocation removing $7,000,000 from inventory values in Q2 twenty twenty five. Net working capital ends at $107,000,000 down from $119,000,000 last quarter.

CapEx in the quarter relates to maintenance and certain upgrades in the Houston factory. Certain development costs mostly related to algae has also been capitalized in the quarter. For the full year, we expect to be within the range of 6,000,000 to $8,000,000 in total CapEx. Positive cash flow from operations of $3,800,000 in the quarter, including a negative change of working capital of $3,000,000 explained partly by the inventory change of $7,000,000 Cash flow from investing activities was negative $3,000,000 and reflects investments in the quarter related to Houston and development of the algae production process. Cash flow from financing was positive $3,000,000 and includes additional draw under the bank overdraft facility in the quarter.

Total cash flow in the quarter was $3,500,000 ending with a cash balance at $19,500,000 Net interest bearing debt for the quarter was $156,000,000 slightly down from last quarter. The capital structure includes interest bearing debt of $176,000,000 in total, including the secured bond of $149,000,000 leasing commitments of $4,000,000 and total draw under the overdraft of $23,000,000 Leverage is at 4.2 times in the quarter and is well below the bank threshold. The company is also compliant with the liquidity covenant of $7,500,000 under the bond agreements. Finally, a look at the balance sheet. Please note that second quarter twenty twenty four figures include Feed Ingredients, while Q4 twenty twenty four numbers exclude Feed Ingredients.

On the asset side, property, plant and equipment is up with investments in the Houston plant. Derivative assets of $7,200,000 is linked to the currency swap and reduces the total interest bearing debt figure. Inventory is up $12,000,000 as a result of Nutramil purchase. Cash and cash equivalent ends at $19,500,000 up from $15,000,000 year end. And assets held for sale includes the protein plant in Xi and Aion.

On the liability side, accounts payables are up as a result of the Nutra purchases. That takes us to a total equity for the quarter at 149.6, implying an equity ratio of 39%. That concludes the financial section. And I’ll give the word over to Mats to conclude.

Mats Jansen, CEO, Akerbia Mining: Thank you, Karina. We’ll give a short outlook for the business, starting with the Human Health Ingredients. As you saw, we had a especially strong quarter, especially on the grid oil side, 26,300,000.0 of revenue. Some quarters, we’ve come a little bit behind our plan, sometimes a little bit ahead. I think this is an example of a quarter that came in a little bit ahead of our plan.

And therefore, in the coming quarter, in the third quarter, I would expect revenues to be about the same. We’re still in that growth mode, but I think second quarter was especially high. And we should steer into the next quarter to be something similar and then back into growth after that quarter over quarter. And again, when I say similar to that means to this quarter, Q2 ’twenty five and Q3 ’twenty five should be about the same. Consumer Health Products, we saw growth here now and we expect to see modest growth in this segment also going forward as this inventory situation has been normalized.

So especially good performance here also, but modest growth in the quarters to come. For emerging business, we are now so close to that breakeven point. We will actually stop doing outlook for this segment going forward. It’s not material for our business anymore. So this will kind of be the last time I’m talking about that in this section.

We’ll talk about that in the operational part. But for outlook, we will not make an outlook for this going forward other than just saying now that we expect it to get towards that breakeven point. For Corporate, we have done some reclassification of costs that moved some of those costs from Human Health Ingredients into Corporate. And as a result now, the estimated corporate cost is a little bit higher, and we expect it to be between 12,000,000 and $14,000,000 going forward. So that’s what we have for you today.

You can send in questions now to irakkbmarin dot com, and then we’ll answer all the questions that’s coming in. Thank you. So let’s take your questions.

Moderator/Analyst: All right. So yes, we have received some questions here, starting here on the HHI segment. And a few questions related to demand sort of. So the first is new countries that you will target in the 2025? Then how much should you be able to raise prices on average over the next years?

And then third, any new claims studies in Krill that you can use in marketing. So if you forget, I can repeat.

Mats Jansen, CEO, Akerbia Mining: Okay. So first question was about new markets.

Moderator/Analyst: New countries, you will target. Yes.

Mats Jansen, CEO, Akerbia Mining: I mean, we will enter some smaller countries. But I mean, we are mainly already in most of the interesting countries. I think there’s some new opportunities coming in Southeast Asia, like Vietnam as an example, that looking like an interesting market now. We talked about Brazil before, where we already have some business, but that’s really emerging and looking quite interesting. So it’s not like we are opening up new markets per se, but it’s more that some of the markets we have entered over the last, let’s say, one to two years will start to mature and we will get more business.

Second question was about pricing. And we will then aim to do inflation adjustment every year. So that depends on the general inflation in the world and just put that at the same level, around 3% or about there, depending on where inflation lands and have that as a regular process that we have, like many other suppliers in our industry also has implemented. And then there’s a price mix, price effect. One is on the customer side that can go up and down, but also when new products coming in like Risoveta, Lusoveta has a significantly higher price than Superba.

And when that gets mixed in, get significantly higher price in the mix. And then the third question was related to new claims. We have one important study ongoing, which results it’s ready and we’re just waiting for publication. And we call it the GLP-one study, but that’s basically looking at the effects of muscle mass when fasting, which is a problem with GLP-one, if you’re familiar with that, that yes, you lose a lot of weight, but you also lose a lot of muscle mass. And we are now studying if Krill can change the ratio between fat and muscle in weight loss when fasting through GLP-one or just general fasting.

So that’s an exciting study that will both be potentially generating new claims in some markets, but also something that we can market quite heavily in PR.

Moderator/Analyst: Very well. Okay. So any updates on the Korean market?

Mats Jansen, CEO, Akerbia Mining: Yes. I talked about it a little bit in the presentation, but we have three claims in the Korean market now approved. Our partner has been waiting for the right moment to launch. There’s been a lot of unrest in Korea the last year or so. So it hasn’t been the right time to kind of launch new campaigns and invest heavily in marketing.

But things have calmed down now, starting to normalize, and our partners are planning to launch new campaigns with those three claims now after the summer. So after that launch, we’ll have more signals to where that market is going.

Moderator/Analyst: And then when is Luciveta expected to be approved for sale in the European market?

Mats Jansen, CEO, Akerbia Mining: Yes. So yes, in 2026 during 2026, I would say, September in 2026, we expect that to be approved. It’s a long process in Europe to get these things approved. But then it’s approved for all countries in the European Union. So right now, we have it approved in Australia, in some Asian markets and in The U.

S, and that’s where we’re focusing our sales focus right now.

Moderator/Analyst: And then staying on Lucerveta. How many tons of Lucerweta are you aiming to sell in 2026?

Mats Jansen, CEO, Akerbia Mining: It’s a little bit early to say that. We expect to sell about $1,000,000 this year in sales and then a quite steep growth from there. But I don’t want to go and guide on that already now for ’26. Okay.

Moderator/Analyst: Were there any large one off sales to new customers or customers filling up inventories in HHI this quarter, very material increase compared to last four quarters in Oats.

Mats Jansen, CEO, Akerbia Mining: Yes. No, I mean, no special kind of inventory buildup, good performance across the board. So this is just reflecting the overall performance and the demand in the markets where we operate.

Moderator/Analyst: Thank you. Yes. Then can you say a bit more about how the algae process is developing?

Mats Jansen, CEO, Akerbia Mining: Yes. So as you remember, and I think I mentioned it a little bit in presentation too, we got some technical problems in our processing. We got some quality issues that we weren’t happy with. We need to have a product that are really top notch because there’s other players in the algae market. So we can be sub on the quality.

So we identify the problems, design solutions and are right now implementing new equipment and new processes in the Houston factory. Around August, that should be implemented and live. And connected to that, we are preparing a relaunch of allergy in the market in the August. So for second half, we expect sales for allergy to be back. Let’s start starting late Q3, so don’t expect too much in the third quarter, but we should get momentum started towards the end of the third quarter.

Moderator/Analyst: And then the understory process of the protein business, the sale of that was delayed in the quarter. Can you say something more about how you see that going forward?

Mats Jansen, CEO, Akerbia Mining: Yes. I mean, it’s a manufacturing site. U. S. Is the biggest protein market in the world.

And after the Liberation Day, for all interesting part, either you were a small company in the kind of a, call it, as protein startup, the owners and investors of that firm didn’t want to put more capital into a manufacturing site. Or if you were a big company, they have put all those type of manufacturing investments on hold until you have clarity of what the tariff picture looks like. So let’s say, if it be very unfavorable tariffs between Norway and The U. S, nothing kind of tells us that, that’s going to happen. But who knows these days, then having a plant in Norway is not a good idea.

So everybody is just kind of waiting to get clarity on that tariff picture before making those type of decisions. And as a result, that process is delayed. And the way IFRS works, you then have to make an assessment if you need to do an impairment of the asset or not, and that’s what we did since we didn’t have kind of clear feedback and that transaction kind of short term ahead. So that’s why we took a write down there.

Moderator/Analyst: Yes. Then there are no more questions. So I guess that concludes the Q and A session. Thank Thank

Mats Jansen, CEO, Akerbia Mining: you to your listening today. See you next quarter.

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