AKVA says inflation from Russian invasion of Ukraine hits hard
August 3, 2022 By Nestor Arellano
AKVA Group says the continuing global economic turmoil caused by Russia’s invasion of Ukraine will dampen the recirculating aquaculture system (RAS) company’s bottom line.
The Norway-based aquaculture technology supplier is still predicting strong revenues for the second quarter of 2022 but earnings before interest and taxes will take a hit.
“AKVA group ASA (“The Company) is expecting a strong revenue of NOK 907 million (US$ 93.3 million) in Q2 2022, representing an increase of nine per cent compared to Q2 2021,” a press release from the company said. “However, the profitability is significantly impacted by increased costs from high inflation rates, warranty and cost provisions. EBIT is expected to be negative of MNOK 41 for Q2 2022.”
The company further itemized the maid contributors to the Q2 shortfall as:
- High inflation rates and supply chain restrictions worldwide driven by the Russia-Ukraine conflict with estimated NOK 37 million (US$3.8 million) in additional costs. Continued uncertainty related to supply chain restrictions and cost inflations may impact the profitability for the rest of 2022.
- One-time cost provisions of NOK 31 million (US$3.2 million) within the sea-based segment, primarily related to an ongoing barge project in Canada.
- One-time warranty and cost provisions of NOK 34 million (US$3.5 million) related to specific land-based projects.
In 2021, AKVA’s profits were also held back by the COVID-19 pandemic.
The company reported then that its 2021 third quarter revenues were pulled down by as much as 8 per cent compared to the same period last year, and net profits dived by 22 per cent due to the negative impact of a major cyber attack and the COVID-19 pandemic.
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