OVERVIEW OF ECONOMIC ACTIVITIES
PRFoods’ sales of 1st quarter 2019/2020 financial year was 19.3 million euros. Net profit 0.57 million euros, four times higher than Q3/2018. EBITDA 1.47 million euros, growth 31%.
MANAGEMENT COMMENTARY
We are happy to announce that based on the first quarter of the financial year (3rd quarter of 2019) the restructuring processes commenced within the Group during the last financial year, are demonstrating positive results.
The reporting period was characterized by a general decline in the prices of raw materials of fishery products, resulting in a fall in the prices of fish, fish fillets and smoked products. In spite of the approximately 5% price drop of the Group's main products, we were able to keep the total sales practically at the level of the last year. The third quarter sales for 2019 totalled 19.33 million euros (Q3 2018: 19.39 million euros).
The Group's consolidated EBITDA for the reporting period was 1.47 million euros, an increase of 31% compared to the same period last year, which was mainly affected by the gain from revaluation of biological assets by 0.85 million euros. Operating EBITDA (i.e. excluding one-offs and fish stock revaluation) was 0.73 million euros (Q3 2018: 1.06 million euros). Net profit was 0.57 million euros, almost four times higher than the net profit for the same period last year (Q3 2018: 0.14 million euros).
The Group's manufacturing and sales companies (Heimon Kala, John Ross Jr., Coln Valley Smokery, Trio Trading, Vettel) significantly improved their operational results compared to the same quarter last year; incl. exceeding the planned ones by ca 0.3 million euros in total. The decline in operating EBITDA compared to the previous year was attributable to the weaker performance of the Swedish fish farming unit (Överumans Fisk) due to the decline in the market price of fish, the recovery of which from its lowest level in the last three years is already noticeable.
We are optimistic about getting additional farming licences already in 2020. We will continue to make necessary preparations to increase the farming capacity which in turn would increase the quality raw material supply from our own Estonian fish farms.
PRFoods’ focus has been on improving cash flow from operating activities, which is reflected in Q3 2019 positive cash flow from operating activities in the amount of 1.3 million euros compared to 0.1 million euros in the same period last year. The Company's net debt was 19.9 million euros as at 30.09.2019 (30.09.2018: 21.9 million euros), which will decrease at the end of the year by repayments of investment loans and higher cash balance due to Christmas sales. As at 30.09.2019, the Group's working capital was negative by 3.0 million euros as current liabilities include liabilities to related parties in the amount of 4.1 million euros, which by their nature are long-term but due to accounting principles shall be reported as current.
We will continue to merge the business operations of the Estonian and Finnish companies and to create synergies, especially in product development and sales both in the domestic and export markets. The merger of the Finnish subsidiaries into one company is proceeding according to plan and Trio Trading Oy and Heimon Kala Oy will be merged into one company, which will continue under the name Heimon Kala Oy. In Estonia we have launched a Finnish-Estonian joint brand – Heimon Kala and for the first time in history we have successfully entered the local retail market with trout farmed in Saaremaa, Estonia.
Regarding the outbreak of listeria that hit the Estonian fishing industry, we can confirm that PRFoods companies have passed all additional controls successfully. The biggest role here is played by our internal quality and food safety controls in our companies, including the day-to-day controls in our own laboratories from the purchase of raw fish to the dispatch of the product from the factory.
The launch of John Ross Jr.'s renewed brand started at the end of the quarter and we expect significant growth in the UK market in the coming quarters.
In order to achieve our goals in the coming periods, the Group has engaged a strengthened management team of professionals. PRFoods team has done excellent job in developing our business and profitability. PRFoods’ balance sheet, production and customer base are strong, and we look optimistically towards future.
Big changes are always challenging for people in the company and I am very thankful that our team has enthusiastically embraced the changes and given their best.
KEY RATIOS
INCOME STATEMENT
| mln EUR | 3Q 2019 | 2Q 2019 | 1Q 2019 | 4Q 2018 | 3Q 2018 | 2Q 2018 | 1Q 2018 |
| Sales | 19,3 | 21.5 | 18.1 | 26.7 | 19.4 | 22.1 | 22.7 |
| Gross profit | 2,6 | 2.1 | 2.1 | 4.7 | 3.0 | 1.8 | 2.4 |
| EBITDA from operations | 0,7 | 0.3 | 0.2 | 2.4 | 1.1 | -0.2 | 0.7 |
| EBITDA | 1,5 | 0.3 | -0.5 | 0.8 | 1.1 | 0.3 | 0.6 |
| EBIT | 1,0 | -0.3 | -1.0 | 0.2 | 0.6 | -0.2 | 0.1 |
| EBT | 0,8 | -0.4 | -1.2 | 0.0 | 0.4 | -0.5 | -0.2 |
| Net profit (-loss) | 0,6 | -0.6 | -1.2 | 0.2 | 0.1 | -1.1 | -0.2 |
| Gross margin | 13,4% | 9.8% | 11.7% | 17.7% | 15.2% | 7.9% | 10.6% |
| Operational EBITDA margin | 3,8% | 1.4% | 1.1% | 9.1% | 5.4% | -1.1% | 3.1% |
| EBITDA margin | 7,6% | 1.4% | -2.5% | 2.9% | 5.8% | 1.2% | 2.5% |
| EBIT margin | 5,0% | -1.2% | -5.6% | 0.9% | 3.0% | -1.1% | 0.2% |
| EBT margin | 3,9% | -2.0% | -6.5% | 0.1% | 1.8% | -2.3% | -0.9% |
| Net margin | 2,9% | -3.0% | -6.6% | 0.8% | 0.7% | -5.1% | -1.0% |
| Operating expense ratio | 13,4% | 11.7% | 14.1% | 11.2% | 13.5% | 12.0% | 10.5% |
BALANCE SHEET
| mln EUR | 30.09.2019 | 30.06.2019 | 31.03.2019 | 31.12.2018 | 30.09.2018 | 30.06.2018 | 31.03.2018 |
| Net debt | 19,9 | 20.5 | 18.7 | 20.0 | 21.9 | 18.1 | 16.7 |
| Equity | 22,8 | 21.9 | 23.3 | 24.2 | 24.1 | 23.3 | 24.3 |
| Working capital | -3,0 | -3.1 | -1.6 | 1.0 | 2.0 | 2.8 | 4.6 |
| Assets | 62,4 | 62.5 | 63.5 | 65.5 | 64.5 | 65.5 | 66.4 |
| Liquidity ratio | 0,9x | 0.9x | 0.9x | 1.0x | 1.1x | 1.1x | 1.2x |
| Equity ratio | 36,5% | 35.0% | 36.7% | 37.0% | 37.4% | 35.6% | 36.6% |
| Gearing ratio | 46,6% | 48.3% | 44.5% | 45.2% | 47.6% | 43.7% | 40.7% |
| Debt to total assets | 0,6x | 0.7x | 0.6x | 0.6x | 0.6x | 0.6x | 0.6x |
| Net debt to EBITDA | 5,4x | 5.1x | 5.4x | 5.1x | 3.8x | 3.1x | 2.6x |
| ROE | -4,5% | -6.5% | -8.2% | -4.0% | 0.1% | 0.2% | 8.6% |
| ROA | -1,6% | -2.3% | -3.0% | -1.5% | 0.0% | 0.1% | 4.1% |
Consolidated Statement of Financial Position
| Thousand euros | 30.09.2019 | 30.09.2018 | 30.06.2019 |
| ASSETS | |||
| Cash and cash equivalents | 2 327 | 2 788 | 2 583 |
| Receivables and prepayments | 3 941 | 4 219 | 5 300 |
| Inventories | 11 035 | 11 782 | 11 980 |
| Biological assets | 7 047 | 7 825 | 4 924 |
| Total current assets | 24 350 | 26 614 | 24 787 |
| Deferred income tax | 58 | 26 | 41 |
| Long-term financial investments | 202 | 134 | 202 |
| Tangible fixed assets | 14 536 | 14 528 | 14 535 |
| Intangible assets | 23 261 | 23 195 | 22 969 |
| Total non-current assets | 38 057 | 37 883 | 37 747 |
| TOTAL ASSETS | 62 407 | 64 497 | 62 534 |
| EQUITY AND LIABILITIES | |||
| Loans and borrowings | 13 467 | 13 242 | 13 502 |
| Payables | 13 796 | 11 179 | 14 105 |
| Government grants | 126 | 242 | 234 |
| Total current liabilities | 27 389 | 24 663 | 27 841 |
| Loans and borrowings | 8 745 | 11 480 | 9 540 |
| Payables | 190 | 519 | 190 |
| Deferred tax liabilities | 2 192 | 2 426 | 2 010 |
| Government grants | 1 140 | 1 306 | 1 087 |
| Total non-current liabilities | 12 267 | 15 731 | 12 827 |
| TOTAL LIABILITIES | 39 656 | 40 394 | 40 668 |
| Share capital | 7 737 | 7 737 | 7 737 |
| Share premium | 14 007 | 14 007 | 14 007 |
| Treasury shares | -390 | -390 | -390 |
| Statutory capital reserve | 51 | 48 | 51 |
| Currency translation reserve | 30 | 31 | -214 |
| Retained profit (-loss) | 636 | 2 004 | 66 |
| Equity attributable to parent | 22 071 | 23 437 | 21 257 |
| Non-controlling interest | 680 | 666 | 609 |
| TOTAL EQUITY | 22 751 | 24 103 | 21 866 |
| TOTAL EQUITY AND LIABILITIES | 62 407 | 64 497 | 62 534 |
Consolidated Statement of Profit or Loss And Other Comprehensive Income
| Thousand euros | 3Q 2019 | 3Q 2018 | 12m 2018/2019 | 12m 2017/2018 |
| Sales | 19 329 | 19 393 | 85,727 | 94,871 |
| Cost of goods sold | -16 747 | -16 437 | -73,830 | -81,694 |
| Gross profit | 2 582 | 2 956 | 11,897 | 13,177 |
| Operating expenses | -2 598 | -2 623 | -10,702 | -10,007 |
| Selling and distribution expenses | -1 792 | -1 843 | -7,499 | -7,125 |
| Administrative expenses | -806 | -780 | -3,203 | -2,882 |
| Other income / expense | 128 | 167 | 83 | -162 |
| Fair value adjustment on biological assets | 846 | 73 | -1,744 | -674 |
| Operating profit (loss) | 958 | 573 | -466 | 2,334 |
| Financial income/-expenses | -203 | -222 | -776 | -936 |
| Profit (loss) before tax | 755 | 351 | -1,242 | 1,398 |
| Income tax | -185 | -209 | -230 | -399 |
| Net profit (loss) for the period | 570 | 142 | -1,472 | 999 |
| Net profit (loss) attributable to: | ||||
| Owners of the company | 513 | 99 | -1 458 | 1,001 |
| Non-controlling interests | 57 | 43 | -14 | -2 |
| Total net profit (loss) | 570 | 142 | -1,472 | 999 |
| Other comprehensive income (loss) that may subsequently be classified to profit or loss: | ||||
| Foreign currency translation differences | 315 | 24 | -221 | -410 |
| Total comprehensive income (expense) | 885 | 166 | -1,693 | 589 |
| Total comprehensive income (expense) attributable to: | ||||
| Owners of the Company | 828 | 123 | -1 679 | 591 |
| Non-controlling interests | 57 | 43 | -14 | -2 |
| Total comprehensive income (expense) for the period | 885 | 166 | -1 693 | 589 |
| Profit (loss) per share (EUR) | 0,02 | 0,00 | -0,04 | 0,02 |
| Diluted profit (loss) per share (EUR) | 0,02 | 0,00 | -0,04 | 0,02 |
Indrek Kasela
AS PRFoods
Member of the Management Board
Phone: +372 452 1470
investor@prfoods.ee
www.prfoods.ee
Attachment
