Strong set of results with sales and profit growth from continuing operations
Bjarni Ármannsson, CEO
“Financial results for the first half of the year, with strong growth both in sales and underlying profitability, are something we at Iceland Seafood are very proud of. My first months in the role of a CEO have been very eventful. The focus this year has been on driving organic growth and efficiency within the Group and unleash the potential in our current business units. As announced earlier this year, we are in the process of merging our two key companies in the South European market, Iceland Seafood SL and Icelandic Ibérica. This merger will create a strong value-added player with great product and brand recognition in the South European market.. We estimate the annual synergies of the merger to be in the range of €3.0-3.5m and expect these to fully materialize before year end 2021. To achieve these synergies, the Group will incur one-off cost related to restructuring in the coming periods.
With the acquisition of Solo Seafood last year, three large seafood companies of FISK, Nesfiskur and Jakob Valgeir became significant shareholders of Iceland Seafood. The benefits of a strongly integrated group have started to come through and form a key driver for the growth in the period, especially within Sales & Distribution and value-added S-Europe divisions. We will continue to focus on utilizing our great platform of 3000 customers in cooperation with producers in Iceland; at the same time, it is important to further expand our substantial global sourcing network outside of Iceland.
The extension of our fresh fish factory at Oceanpath was finalized in the first half of the year. We also invested in a salmon filleting line which was up and running from mid-July this year. These investments will create new sales opportunities and increase efficiency within the business in Ireland.
Our Value-added S-Europe division performed very well in the period, with sales of €96.8m up 7% from 1H 2018 Proforma. The sales growth was driven by strong demand of frozen light salted products from Iceland and squid sales from Argentina, a project that started this year and delivered additional sales of €2.1m in the period. This sales growth and cost reduction related to the merger in Spain were the key drivers for increased profitability of the division. Normalised PBT for the period of €3.8m was €1.0m higher than 1H 2018 Proforma. Political uncertainty in Argentina, as well as fluctuation of Argentinean shrimp prices, is likely to negatively impact profits for Achernar in the second half of the year. We also expect to see lower sales volumes of wet salted products in Spain due to increased competition and less availability.
The first half results of our Value-added N-Europe, which incorporates our manufacturing sites in Grimsby, Bradford and Dublin, were impacted by external challenges in the period. Sales in the period of €48.3m were 3.5% down on 1H 2018 Proforma, and Normalised PBT of €1.6m was down €0.9m. The uncertainty around Brexit has led to more fluctuation in the market and higher stockholding within our businesses. High raw material prices, especially salmon prices, have impacted margins in the period. Outlook for the second half of the year is encouraging for the division. Salmon prices have now stabilized and are currently at a lower level than same time last year and we will start getting benefits from the investments at Oceanpath. In UK, we will see a positive impact of new listings with key retailers in the market and benefits from cost reduction actions within both the UK businesses will come through in the second half of the year.
Our Sales & Distribution division saw a positive impact of a more integrated value chain and a closer cooperation with producers in the period. The sales in the first half of €102.3m increased by 10.8% from same period 2018, with growth largely relating to sales of frozen-at-sea products from Iceland. Normalized PBT in the period of €1.0m was €0.5m up from same period last year. Increased sales were the main driver for improved profitability, helped by a €0.1m reduction in operating cost, driven by cost savings in Iceland and a slightly weaker ISK.
Total assets at end of June were €204.0m, compared to €193.8m at end of year 2018. Key movements in the period relate to a €5.3m higher cash position in Spain. The implementation of IFRS 16 Lease accounting was implemented in the 1H 2019 accounts, which lead to €3.3m increase in assets. Equity ratio was 30.6% at end of June, with a negative impact of IFRS 16 of 0.7 percentage points.
A key project for this year is the listing of the company´s shares on Iceland’s Nasdaq Main Market. In June, Kvika Bank and Lex were appointed as financial and legal advisors for the process. The board and management, in cooperation with our advisors, are currently working hard on preparation for the listing, which is expected to be finalized in October. As approved at the Annual General meeting in June this year, 225 million new shares will be issued and sold in a public offering in relation to the listing. The offering will further strengthen the company financial position, facilitate increased liquidity of the shares and create a more diverse shareholder base, as well as support the company for continued growth going forward.”
On August 28th at 16.00 am, Iceland Seafood International hf will host a meeting for market participants and investors, where management will present and discuss the 1H 2019 results. The meeting will be held at the Company’s premises at Köllunarklettsvegur 2 in Reykjavík.
This announcement is furnished and intended for European market participants and should be viewed in that light.
Any potential forward looking statements contained in this announcement reflect the management's current views on future events and performance, whilst those views are based on positions that management believes are reasonable, there is no assurances that the stated events and views will be realized. Forward looking views naturally involve uncertainties and risks and consequently actual results may differ from the statements or views expressed.
For more information:
Iceland Seafood International hf. +354 550 8000
Bjarni Ármannsson, Chief Executive Officer
Reynir Jónsson, Chief Financial Officer