Pelagia Holding AS - Financial Report Q3 2024

14 Nov 2024 07:00 CET

Pelagia Holding AS - Financial Report Q3 2024

Revenues for Q3 24 were 4.199 MNOK (Q3 2023: 3.236 MNOK). EBITDA was 515 MNOK in
Q3 24 (Q3 2023: 565 MNOK). Profit before tax was 327 MNOK in Q3 24 (Q3 2023: 380
MNOK). YTD revenues were 10.072 MNOK as per Q3 24 (YTD Q3 2023: 8.794 MNOK).
EBITDA were 1.110 MNOK as per Q3 24 (YTD Q3 2023: 1.282 MNOK). Profit before tax
was 523 MNOK as per Q3 24 (YTD Q3 2023: 755 MNOK).

In Q3 24 Pelagia had an increase in raw material volume in the FOOD division
compared to Q3 2023. The main explanation for the increase is a higher volume of
both mackerel and north-sea herring vs last year. For mackerel the better
availability in the Norwegian fishing zone explains the increase. Less mackerel
will therefore be caught in Q4 in the UK fishing zone by the Norwegian fishing
fleet. This is therefore mostly a timing issue. The demand seems to be good for
the FOOD products through the current main season. The FOOD stock values have
increased significantly through the high season due to very high prices
especially for mackerel. The FOOD working capital will be reduced from a Q3 high
season peak gradually towards the end of 2024 and into 2025. Based on the ICES
recommendations it is expected that the mackerel quota in the North Atlantic
will be reduced about 22% next year.

Pelagia generates revenue worldwide and, for the FOOD division in particular,
Eastern Europe remains an important market. The current war in Ukraine increase
the risk related to the operations in the FOOD division somewhat. As per today
Pelagia has no material assets related to Ukraine recorded in the balance sheet.
Further, due to the world economy challenges in 2024 it still seems to be a
challenge in several countries to have access to f.ex USD for international
payments. Following the landing obligations introduced in UK/Scotland a part of
the raw material historically landed in Norway by UK/Scottish vessels now partly
must be landed in UK/Scotland.
This increases the competition between the Norwegian bidders for raw material.
Pelagia is present with factories in both markets.

The FEED division has a small decrease in raw material volume in Q3 24 vs Q3 23.
This is explained by a scheduled maintenance in one of the FEED factories.
Coming out of the El Niño situation in the Pacific the last anchovy fishing
season in Peru gave a more normalised volume and a high oil yield. Due to the
better production of oil, market prices for fish oil have weakened somewhat but
we expect the price to stabilise into 2025. The current demand for fish meal is
high and stocks are limited. We expect the FEED working capital to normalise
further through Q4 with the delivery of the feed stock. The anchovy fishing
quota in Peru is set at 2,51 million tons for the next season which is somewhat
higher than expected. Still, there remains some uncertainty about the quota
actually being caught. The potential impact on meal and oil prices are therefore
also uncertain.

The market demand for the HEALTH division products has remained sound, also
during 2024. With the increased catch and improved oil yields in Peru this last
season we see lower raw material prices for oil to the Omega-3 market. With the
reduction in prices we also see some uncertainty about price level in the
Omega-3 market. With the 2021/2022 upgrade of the factory in Ålesund the
HEALTH-division should be well prepared for the competition in the Omega-3
market. Further, the factory is also being prepared to produce oil-products
based on North-Atlantic raw material which will broaden the market for the
facility. With more raw material being available from Peru the stock level has
increased significantly vs last year. A reduction is expected gradually until Q3
next year.

The Group's ability to utilise its production capacities depends on the supply
of raw materials in the North Atlantic and thus the size of the global quotas
that are distributed between the countries which have a share of these fish
resources. The prospects for the fisheries on which the group bases its
operations in total remain stable going forward. Still, short-term there can be
variations in quotas and the available raw material. The long-term goal of
Pelagia is to favour the sustainable management of the main fish stocks. At the
moment Pelagia do not see a significant climate risk that should affect the
fisheries and the related value of its assets. Still, long-term it could be a
risk that the fisheries in the North Atlantic are impacted by climate changes.

In common with many other companies, Pelagia has experienced higher costs
related to energy, international freight, logistics and cost increases in
general related to the operations during 2022 and 2023. Most of these have
stabilised, but we still see that the political situation could affect costs
such as f.ex. international freight costs and inflation also in 2024.

In March 2024 Pelagia issued a new unsecured 5-year 1000 MNOK bond. The bond had
a coupon of 3m NIBOR + 2.75% p.a.

Pelagia paid out a dividend of 400 MNOK in May 2024 to the shareholders.

In January 2024 Pelagia participated in a share issue in Blue Ocean Technology
AS and became the majority shareholder in the company. Blue Ocean Technology AS
has developed technical solutions for dewatering, concentration and drying of
sludge for the aquaculture industry. In June 2024 Pelagia took over 100% of the
shares in Blue Ocean Technology.

Further, in March Pelagia acquired Ideal Foods Ltd. Ideal Foods is a specialist
supplier of fish, shellfish and co-products. Ideal Foods works closely with fish
processors and manufacturers to utilise seafood co-products in an innovative way
that aims to utilise all material and ultimately add value. Also, Pelagia
acquired Charlie Vial Ltd in April 2024. Charlie Vial Ltd specialise in
manufacturing fish by-products into ingredients for the pet food industry.

In October, the group lost a court case in the District Court related to the
delivery of wastes and by-products from production in the HEALTH division. Due
to the development of the product portfolio, a smaller volume has been sold
under contract to the buyer of by-products. Due to the reduction in the
delivered volume under the contract, the company has been sentenced to pay the
customer a compensation of NOK 53 million including costs and interest. Pelagia
strongly disagrees with the verdict, which will be appealed. Pelagia will
normally take full provisions for potential losses, but due to, in our opinion,
several fact-based errors in this verdict our provisions do not cover the cost
of the temporary verdict.

No other events have occurred after the balance sheet date that have material
impact on the presented quarterly report.

For further information see attached the Q3 2024 Financial Report.

For any questions, please contact:

CEO Egil Magne Haugstad emh@pelagia.com
CFO Rolf Andersen ran@pelagia.com

See www.pelagia.com for further information about the company.

This information is subject to the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act

More information:
Access the news on Oslo Bors NewsWeb site

632139_Financial Report Pelagia Q3 2024.pdf