Danish feed giant BioMar’s strategy to turn around its business model in Norway is paying off, and although the company’s margins are not yet “what we would like them to be,” things are definitely on the right track, Carlos Diaz, CEO of BioMar, told IntraFish.

“The salmon market continues to be extremely competitive, and in times of crisis businesses have to rethink their operational model. This is bringing good results for us,” Diaz said.

The Norwegian salmon feed market is at full capacity, with BioMar predicting months ago a slowdown of one to two years in growth.

As part of the restructuring, BioMar changed its entire management team in Norway and implemented measures to improve efficiencies in plant operation, logistics, costs, products and its approach to its clients.

“We’re not exactly where we want to be, but we’ve seen a significant reduction of costs and other improvements. We’re on the right track,” Diaz said.

In addition, the company has embarked on several initiatives to not just provide clients with feed products but also to help them with sustainability and brand recognition issues in different regions.

“We needed a change, we have adapted our organization, our operating model, and we’re more agile now. We think this is the way.”

The company reported earnings before interest, taxes, depreciation, and amortization (EBITDA) for the second quarter of the year of DKK 191 million (€25.6 million/$28.4 million), up 9 percent compared with a year ago.

Sales over the period were flat year-on-year at DKK 2.51 billion (€336.5 million/$373.7 million).

Contract wins in UK, Chile

The company closed several significant contracts both in the United Kingdom and Chile over the period.

Last year, feed giant Skretting closed its feed production plant in Scotland citing an overcrowded salmon feed market, which left some room for existing producers to step up.

In Chile, BioMar’s decision to buy 50 percent of its joint venture from AquaChile has given the company a much greater free capacity to sell to other producers.

Both companies had a joint ownership of a feed plant in Pargua for 10 years, but the acquisition of AquaChile from Agrosuper led both companies to change their strategies.

“This is working out the way we intended,” Diaz said.

“In the short or medium term, Agrosuper will increase its fish feed production capacity, so our decision was to diversify and not depend on one customer that we know is looking to further integrate feed into its business.”

In the first half of this year, BioMar reported a 26.8 percent increase in EBITDA, totaling DKK 322 million (€43.2 million/$47.9 million), while sales went up 5.65 percent, to DKK 4.6 billion (€616.7 million/$684.8 million).

Following the results, the company is raising its revenue guidance for the full year to DKK 10.8 billion (€1.4 billion/$1.6 billion). It also raised its EBITDA guidance to between DKK 870 million (€116.6 million/$129.5 million) and DKK 930 million (€124.7 million/$138.5 million) from a previous DKK 820 million (€109.9 million/$122.1 million) to DKK 890 million (€119.3 million/$132.5 million) forecast.

Aquaculture

BioMar CEO: Contracts, turnaround strategy shows company 'on the right track'