BioMar grew year-on-year volume sales by 8% in Q1 with a revenue up by 34%. While the top line is growing, the bottom line is challenged by raw material prices, the cost of energy, and the decision to suspend trading with Russia.
The significant increase in revenue in Q1 was driven by higher sales volumes, raw material prices, and to some extent currency rate development. However, earnings were significantly impacted by the sharp increase in raw material prices and energy costs not yet passed on to the customers.
Adding to the challenges following the Russian invasion of Ukraine, the earnings for Q1 dropped due to a legal dispute in Norway and changed accounting policies for IT investments. EBITDA for Q1 2022 thus came to DKK 54 million (USD 7.7 million), compared with DKK 133 million (USD 18.9 million) in Q1 2021.
BioMar lowers its guidance for the year 2022. The steep increase in prices of raw materials, freight, and energy is expected to continue. At the same time, BioMar has comprised the risk related to the suspended trading with Russia in the expected full-year results. Following the invasion of Ukraine, BioMar left the Russian market both in terms of sales to Russia and in terms of sourcing raw materials.
“We made a tough decision following our values when we suspended trading with Russia. Our sale in Russia has for years been a very important part of our business, especially for the BioMar units in Denmark and Norway. At the same time, we have sourced some of our key raw materials in the area now affected by the conflict. However, our customers must be able to rely on us as a business partner with high ethical standards,” stated Carlos Diaz, CEO BioMar Group. “The decision will take its toll at BioMar, but we are a part of society, and we need to take responsibility. My only concern – and surprise – is that some of our international competitors have not taken the same position but are rather taking advantage of the situation. But even knowing this, we would have taken the same decision, since it is the right thing to do. This is not a food crisis for the people in Russia, but a humanitarian crisis for the people in Ukraine.”
The decision to suspend trade with Russia has impacted sales of finished goods as well as purchase prices for raw materials, as suppliers need to be substituted. At the beginning of the year, EBITDA was expected in the DKK 980-1,040 million range. The international sanctions have increased the risk of receivables and other assets held in Russia. Against this background, BioMar now expects to generate full-year 2022 EBITDA in the DKK 890- 940 million range.
