Earnings call transcript: Arctic Fish Q4 2024 shows record EBIT, stable growth

Arctic Fish Holding AS reported its Q4 2024 earnings, showcasing significant financial growth and operational achievements. With a market capitalization of $192 million, the company’s total revenues reached $83.93 million in the last twelve months, with EBITDA of $26.5 million. The stock remained steady, reflecting investor confidence in the company’s strategic direction and financial stability. According to InvestingPro, which provides 12 additional expert insights for this stock, net income is expected to grow this year, though the company currently trades at a relatively high P/E ratio of 67.9x.

Key Takeaways

• Total (EPA:TTEF) revenues and operational EBIT reached record highs in Q4 2024.
• Arctic Fish plans a 40% increase in production volume for 2025.
• The company aims to expand smolt production capacity to 2,400 tonnes.
• Arctic Fish maintains a strong competitive position in Iceland’s salmon farming industry.

Company Performance

Arctic Fish demonstrated robust performance in Q4 2024, with a marked increase in revenues and operational EBIT compared to the previous year. The company’s integrated value chain—from smolt production to harvesting—has bolstered its competitive edge, enabling it to capitalize on favorable market conditions. With a beta of -0.13, the stock often moves independently of market trends, as revealed by InvestingPro analysis. Arctic Fish’s strategic focus on sustainability and quality continues to drive its growth in Iceland’s burgeoning salmon farming sector.

Financial Highlights

• Total revenues: Significant increase from Q4 2023.
• Operational EBIT: Reached record high levels.
• Total equity: Increased to €88.4 million, up €1.2 million from the previous quarter.
• Equity ratio: Slightly decreased to 35.4%.
• Net interest-bearing debt: Reduced from the previous quarter.

Outlook & Guidance

Arctic Fish has set an ambitious harvest target of 15,000 tonnes for 2025, with a long-term goal of 25,000 tonnes by 2029. The company’s growth strategy includes organic expansion, additional farming sites, and increased smolt production. These initiatives aim to utilize existing license capacity fully and expand the company’s market presence.

Executive Commentary

CEO Daniel Treiten highlighted the company’s achievements, stating, "2024 marked our highest operational EBIT in the company’s history." He emphasized the company’s stable financial position and readiness for sustained growth, noting, "We are currently in an application process to expand this capacity to 2,400 tonnes."

Risks and Challenges

• Market volatility: Fluctuations in salmon prices could impact revenue.
• Regulatory changes: Potential shifts in environmental regulations may affect operations.
• Expansion risks: The planned increase in production capacity may face logistical or financial hurdles.
• Competitive pressures: Growing competition in the salmon farming industry could challenge market share.
• Environmental factors: Climate change and its impact on marine ecosystems could pose long-term risks.

Arctic Fish’s Q4 2024 results underscore its strong operational footing and strategic growth plans, positioning the company well in the competitive landscape of Iceland’s salmon farming industry.

Full transcript - Arctic Fish Holding AS (AFISH) Q4 2024:

Daniel Treiten, CEO, Arctic Fish: Hello, everyone, and welcome to Arctic Fish Q4 twenty twenty four presentation. My name is Daniel Treiten. I’m the CEO of Arctic Fish. And as always, I’m joined by our CFO, Baldur Smaughey Einarson. Today, we will take you through the highlights of the quarter, key financial and our outlook going forward.

Before we begin, I just want to highlight this presentation includes forward looking statements. This reflects our current expectation, but of course, like always, are subject to various risks and uncertainties. Actual results may differ from the projections. Alte Fish is a leading salmon farming company in Iceland Listed on Euronext (EPA:ENX) Growth in Oslo, we operate a fully integrated value chain from smalt production to harvesting and sales. This is ensuring both quality and also the sustainability and the build up of the company.

Our total production capacity is 29,800 tonnes MAB, covering 10 farming areas across five fjords in the West Fjords Of Iceland. So then going over to the highlights. 2024 marked our highest operational EBIT in the company’s history and also a profitable bottom line. We harvested 3,456 tonnes in Q4 compared to 2,529 tonnes last year at the same quarter, showing strong growth. Operational EBIT was per kilo.

This is compared to the last year and is mainly related to market conditions. Our long term target plan remains firm with a volume target of twenty five thousand tonnes by 2029, and this is also then supported by secured smolt capacity. And by that, I want to hand this over to you, Wardro, who will take you through some of the key points regarding our financial performance in the quarter.

Pautus Morenason, CFO, Arctic Fish: Thank you, Stein. My name is Pautus Morenason, and I am the Chief Financial Officer of Arctic Face. As always, we will begin with a summary of the profit and loss. In the fourth quarter of twenty twenty four, we saw positive developments in our financial performance compared to the same period last year. Let’s take a look at the highlights.

First, our total revenues for the quarter reached million, representing a significant increase for million in quarter four in 2023. This improvement is largely attributed to two key factors, a 1,000 tonne increase in volume and price achievements variance during the period. Looking at profitability, our operational EBIT stood at million, which is a decrease from last year’s million. It’s worth noting that our overall EBIT increased to million compared to million in the same quarter last year, showing improved bottom line performance. When it comes to financial items, net financial losses were EUR 2,700,000.0 in the quarter compared to EUR 2,300,000.0 in the same period last year.

Next (LON:NXT), we look at the financial position. At the end of the year, our total assets stood at million, an increase of million from the end of quarter three. This growth was mainly due to an increase in geological assets. In terms of net interest bearing debt, we achieved a slight improvement, reducing debt from million at the September to million at the December 2024. This reflects our continued efforts to manage debt levels effectively, and we’ll break this further down in the next slide.

Turning to equity. Our total equity increased to €88,400,000 up by €1,200,000 from the previous quarter. However, the equity ratio has decreased slightly, now standing at 35.4. This is something we are monitoring as we continue to balance our growth initiatives with debt management. Let’s now move on to the cash flow and net interest bearing debt.

In quarter four twenty twenty four, net interest bearing debt decreased slightly from million to million, mainly due to positive operational cash flow. This improvement is largely related to working capital release since quarter four has a lower buildup of biomass as a result of biological seasonality. Capital expenditure have had a minimal impact on debt level in quarter four this year as we have invested less this year compared to the previous years. Key contributors to cash flow this quarter include an operational EBITDA of million, complemented by million from working capital changes, which together resulted in a total cash flow from operation of million. However, these gains were partly offset by net interest and financial items of million along with currency effects and other adjustments.

In summary, retail investments and strong operational cash flow supported that improvement in net interest bearing debt this quarter. That’s all from my side for now. Over to you, Stijn.

Daniel Treiten, CEO, Arctic Fish: Thank you, Baldur, for this overview. Showing some key points from our CapEx this quarter. The CapEx was minimal as planned, and we focused on minor farming and production improvements, optimizing the efficiency and operations. Going forward, investments will, of course, align with our growth strategy. Heading into the outlook.

In Q4, as mentioned, we harvest 3,500 tonnes and surpassing last year’s 2,500 tonnes. For 2025, we have set the target and the guiding at 15,000 tonnes, reflecting a 40% increase year over year. By 2029, we aim to reach 25,000 tonnes. This done by organic growth, more sites, more smolt intersea and utilizing our existing license capacity. Our total production capacity now is 29,800 tonnes, covering 10 farming areas in five different fields.

We also hold a land based small production license in Oderbottom with an annual capacity of 1,000 tonnes. We are currently in an application process to expand this capacity to 2,400 tonnes. To summarize, Altefeesch have had a strong Q4 with record high operational EBIT and a continued growth in volumes compared to last quarter. Our financial position remains stable, and we are well positioned for sustained growth towards our 25,000 tonne target in 2029. And by that, I want to thank you all for joining our presentation today.

We truly appreciate your continued support and interest in Arctic Fish. And we also look forward to seeing you again at our next Q1 presentation in May. Again, thank you, and we look forward to sharing our progress with you next time.

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