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Iceland Seafood International hf: Q1 2020 results impacted by Covid19. Strong sales to retail partly offsetting shortfall in sales to foodservice and HORECA sectors


  • Sales for Q1 2020: €107.3m, down 11% from Q1 2019
  • Net margin for Q1 2020: €9.9m, down €1.3m from same period 2019
  • Normalised profit before tax in Q1 2020: €2.6m compared to €3.5m in Q1 2019
  • Basic earning per share (EPS) for Q1 2020 were €0.0722 cents per thousand shares compared to  €0.0818 cents per thousand shares for Q1 2019
  • Acquisition of Elba completed on February 21st 2020
  • UK merger project on track despite external challenges
  • The Group‘s financial and operational strength to be leveraged to act on both short term and longer term strategic opportunities in the situation
  • Normalised PBT outlook range of €6.0-9.0m for 2020, based on a scenario that sales will bottom in Q2, start to recover in Q3 and be on track in Q4.

Bjarni Ármannsson, CEO

“The results of Q1 2020 were marked by the outbreak of Covid19 and actions taken to control the outbreak.  This did especially impact the business in S-Europe, where overwhelming part of sales are to the HORECA sector which was heavily impacted by the lockdown implemented in March.  On the other hand our retail sales have been strong from mid March which has helped mitigating the overall impact.

On February 21st the acquisition of Elba was completed, which will further strengthen our position in the S-European market.  At the same time the Group sourcing network is strengthened with the former owners of Elba, GPG Seafood and Icemar, becoming shareholders in Iceland Seafood. 

Important steps were taken on the merger project in Spain during the period.  The legally merged entity Iceland Seafood Iberica started operation in beginning of the year.  From February all production of light salted cod is in one location in Barcelona, with Ecomsa in Malaga now focused on local distribution in Andalusia. The outbreak of Covid19 has delayed distribution in the overall operation and are currently causing delay in the overall synergy creation from the merger.  The estimate of overall synergy impact remains unchanged, we expect these to be in the range from €3.0-3.5m and be fully realised during 2021.  

On March 4th we announced a significant investment in processing and coldstore capacity in Grimsby in the United Kingdom.  Our two subsidiaries in UK, Iceland Seafood Barraclough and Havelok will be merged during this year, under one management team and in a single manufacturing side. The total investment for the site, refurbishment and machinery to fully utilise its potential is between £5.0-6.0m. We are in active discussion with key retail customers on new listings in the autumn and Q1 2021.  Product range will reflect current offerings but on a larger scale. In order to be the sole shareholder of the merged entity, a 33% minority share in Havelok held by the management was acquired on March 4th.

The Covid19 outbreak has had significant impact on the operation from Mid March.  The financial and operational strength of Iceland Seafood has enabled us to manage the situation effectively.  We have taken actions to put appropriate contingency plans in place to protect health and safety of our employees and to secure continuity of operations.  Risk management controls have been tightened with focus on liquidity and active management of our current assets on the balance sheet, i.e. receivables and inventories.  Over 90% of the Group receivables are credit insured and our inventories are in good shape with vast majority being frozen goods.  It was an important step to secure liquidity of our operation, when we secured new long term funding for the operation in Spain in April.  These are loans with number of local banks in Spain, with total amount in excess of €17m. At the same time actions were taken to increase our funding headroom with our banking partner in Iceland.   

Covid19 will continue to impact sales and profitability in Q2.  The Group base scenario expects sales to bottom in Q2, start to recover in Q3 and to be on track in Q4.  Based on this view the Group estimate the full year 2020 Normalised PBT to be in the range from €6.0-9.0m.  Uncertainty remains significant on development of the pandemic and for how long sales and profitability will be impacted by the situation.  We will communicate further on the matter and narrow the outlook range as less ambiguity will be on the development. 

Whilst the current situation is bringing on some significant challenges, we as a group are also in unique position to act on opportunities that come up in the situation, which we are actively working on.  This applies to both short term opportunities related to sourcing and marketing and also longer term strategic opportunities.”

Investor meeting

On May 19th at 8.30 am, Iceland Seafood International hf will host a meeting for market participants and investors, where management will present and discuss the Q1 2020 results. The meeting will be held at the Company’s premises at Köllunarklettsvegur 2 in Reykjavík. The meeting will be also be webcasted live on https://livestream.com/accounts/11153656/events/9126432/player  and recording will be available after the meeting on www.Icelandseafood.com/investors

Disclaimer

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.                                                           
http://www.icelandseafood.com/Investors

Bjarni Ármannsson, Bjarni.armannsson@icelandseafood.com


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