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Russia's largest salmon producer sinking funds into new farms, hatcheries

Russian Aquaculture's $50 million secondary public offering will drive new growth, CEO tells IntraFish.

Russian Aquaculture, the country's largest salmon and trout producer, will use funds from an upcoming secondary public offering (SPO) on ​​the stock exchange in summer or fall to build new farms and hatchery facilities.

The decision was made this week at a meeting of the board of directors, Russian Aquaculture CEO Ilya Sosnov told IntraFish.

The firm expects to raise up to $50 million (€47.6 million) in the SPO, which will be invested into further development.

Russian Aquaculture is planning to acquire new fish farming sites, construct new farms in the Barents Sea and expand its hatchery facilities, Sosnov said.

The company has 29 sites in the Barents and White Seas and on the lakes in Karelia for commercial salmon and trout farming, respectively.

Total capacity is estimated at around 70,000 metric tons per year, or approximately 50 percent of the total consumption of salmon and trout in Russia.

The largest shareholder of Russian Aquaculture is Maxim Vorobiev, who owns 47.78 percent of the shares. He is a brother of Andrey Vorobiev, the Moscow region's governor.

According to the company’s latest annual report, last year’s production of farmed salmon soared 2.4 times compared to 2015 to 4,680 metric tons. Trout production in Karelia grew 25 percent to 1,520 metric tons.

Farmed salmon sales more than tripled to RUB 2.01 billion (€32.6 million/$34.3 million), while revenue from trout production increased 32 percent to RUB 461 million (€7.5 million/$7.9 million).

"The company’s consolidated revenues for 2016 hiked 2.9 times compared to 2015 due to larger farmed fish output, higher quality of products and favorable prices," Sosnov said.

At the end of last year, the estimated salmon biomass was 9,196 metric tons, up 181 percent over 2015. Trout biomass was estimated at 1,722 metric tons, an increase of 20 percent.

Russian Aquaculture expects to increase its overall farmed fish production by around 50 percent to over 9,000 metric tons by the end of 2017.

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"We can see significant potential for the company's development in the Russian Arctic conditions," Sosnov told IntraFish.

"Successful development of salmon farming in Iceland, Norwegian salmon farmers operating in the north and being listed in the top 10 most profitable aquaculture companies, allow us to hope for the success of our project, evolving in the same climate conditions."

In 2015, Russian Aquaculture was on the verge of bankruptcy due to mass deaths of salmon at its sites. In the first half of 2015, the company’s losses exceeded RUB 300 million (€4.8 million/$5.1 million), while the net debt amounted to more than RUB 4.3 billion (€70.8 million/$74.4 million) by the end of 2015.

Last year, Russian Aquaculture sold its distribution division Russian Fish Company for RUB 1.8 billion (€29.1 million/$30.7 million).

“Due to the close of this deal, the absence of significant losses caused by fish death and positive 2016 financial results the company reduced its net debt by 28 percent to RUB 3.2 billion [€51.2 million/$54.5 million] by of the end of 2016," Sosnov said.

Russian Aquaculture’s long-term development strategy is to become the country’s largest vertically-integrated player in the aquaculture sector, including its own production of fries, farmed fish processing and distribution.


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