Successful expansion of strategic platform and very solid profit
Royal Greenland achieved record earnings of DKK 335m before tax. With the acquisition of Quin-Sea Fisheries Ltd. in Newfoundland, the company further strengthened its position in cold water shrimp, while adding a third core activity in the form of snow crab.
The financial year reflects 15 months of operation as a result of the changed financial year, which will now follow the calendar year going forward.
Revenue of more than DKK 7 billion and a profit before tax of DKK 335m must be viewed in the light of the extended operating period, but even on a comparable basis it represents a record profit for the Group.
On a 12-month basis, the Group achieved revenue growth of 14% to DKK 5.4 billion, which means that Royal Greenland’s revenue is now back to the levels preceding the sale of the Wilhelmshaven business, which at the time represented 40% of the Group’s total volume.
The 12-month profit before tax is approximately DKK 20m higher than in the previous financial year, which at the time was also a record high profit for the Group.
Royal Greenland’s strategic platform, as defined in the strategy “The North Atlantic Champion”, now comprises cold water shrimp, halibut and snow crab. The acquisition of Quin-Sea Fisheries has improved Royal Greenland’s market access to North America for both Canadian and Greenlandic products. Going forward, North America will be a primary market for Royal Greenland, on a par with Asia, Scandinavia and Europe.
“Royal Greenland is one of the largest companies in a highly fragmented North Atlantic fishing industry and the market leader in shrimp, halibut and lumpfish roe,” says CEO Mikael Thinghuus. He continues: “Our size enables a vertically-integrated approach to all major world markets in our core species, based on long-term and trusting partnerships with both suppliers and customers. This is reflected in Royal Greenland’s vision to be closest to the fish, closest to the customers and closest to the consumers.”
The profit for the year after tax amounts to DKK 173m, which according to the company’s dividend policy would normally trigger a dividend payment of DKK 87m to the owner, corresponding to 50% of the profit. However, as a result of the strong return on strategic investments, a recommendation will be presented for approval by the annual general meeting to issue an ordinary dividend of DKK 100m.
Two new trawlers have been commissioned and will replace factory trawlers Sisimiut and Qaqqatsiaq. Expected delivery in 2019.
Royal Greenland has also decided to replace the two factory trawlers Sisimiut and Qaqqatsiaq. The two new trawlers, which represent the largest investment in the company’s recent history, will be delivered in 2019.
The high level of investment resulting from the strategic initiatives is reflected in the somewhat higher net interest-bearing debt, which at year-end amounted to DKK 1.3 billion, compared with DKK 1.1 billion in the previous financial year. Meanwhile, Royal Greenland remains a financially strong Group in every respect, with equity at DKK 1.4 billion and a solvency ratio of 32%.
The outlook for 2017 is a continuation of the company’s positive development over the past six years. A higher 12-month profit is expected in 2017. As investments will also remain high, net interest-bearing debt is expected to increase during 2017 to around DKK 1.6 billion.
The earnings performance is highly dependent on developments in wild populations and associated quotas, particularly those in Greenland and Canada upon which Royal Greenland depends. Other factors include general developments in the global economy and developments in sales prices of the company’s core products.