AKVA group CEO reports revenue in excess of NOK 3 billion

In 2019 AKVA group exceeded 4 billion NOK of order intake and 3 billion NOK of revenue, resulting in an average growth for the period 2016 to 2019 of 27% and 24% respectively, according to AKVA's  CEO  Knut Nesse annual Report.  

Knut Nesse assumed the position as CEO in November 2019. He holds an MBA from the Norwegian school of economics and business administration (NHH) and is on the Board of several companies. Previous roles include extensive CEO experience from international leading company. 6 years as CEO of Skretting Group (part of Nutreco) (2006 – 2012) and 6 years as CEO of Nutreco (2012 – 2018). Nutreco is a global animal nutrition and fish feed company. Mr Nesse was first elected to the Board of Directors at the general meeting 9 May 2019. Mr. Nesse later stepped down from the Board to assume the position as CEO. He is a Norwegian citizen and resides in Bryne, Norway.

The order back log has grown to a record high 2.3 billion NOK at the end of the year. However, as the fourth quarter results revealed, the company’s project execution capabilities have not been at the highest standards – improvement initiatives is, and will be in focus going forward within the areas of project management as well as learning and development.

Key figures:

• Order Intake: MNOK 4,014 – up from MNOK 2,555 in 2018
• Revenue: MNOK 3,077 – up from MNOK 2,579 in 2018
• EBITDA: MNOK 272 – up from MNOK 238 in 2018
• EBIT: MNOK 62 – down from MNOK 130 in 2018
• Number of employees (FTE): 1422 down from 1493 in 2018 

Cage Based Technology

AKVA group acquired Egersund Net as of August 31, 2018. In 2019 the company has been integrated in the group and has contributed with more than MNOK 700 of revenue. Egersund Net offers a variety of fish nets as well as having an extensive network of service stations along the Norwegian coastline. More than half of the revenue stems from the service activity. In 2019 the company has made plans and started building another service station at the very north of Norway, as well as approving investments in additional one station. Having Egersund Net as a group member has allowed for complete solution and service offerings, which will clearly be beneficial going forward.

The group’s Americas region continue to deliver improved results and substantial improvements in offerings has been made in 2019. An above 10 MUSD order has been secured for deliveries of feed barges to Chile, this is the first ever feed barge order for the country and is an important milestone for further deliveries of well-known barge design to this market.

The group also separated out its Land Based activities in Chile to a separate entity in 2019, and at the end of the year signed a significant order for a RAS facility, to be delivered under a co-operation agreement with Cooke Aquaculture. 

In Canada, on Newfoundland the group entered into an agreement for deliveries of feed barges to Grieg NL in 2018, and the customer signed up for the first of these, during last year. Newfoundland, one of few areas globally where salmon farming is expected to grow significantly, has been and is very high on the strategic agenda. Akva Group has worked hard to ensure that it secures a strong position to be a full solution and service provider in the area. A major step towards this was made early 2020, as the concern completed an acquisition of a net service company, which will be one of the platforms for growing business in the area.

Competition in the Cage Based area within the Nordic region, has continued to intensify during the last three years, but still Nordic is the main contributor to revenue and earnings for the group.

In 2019 the group launched new solutions such as a new and improved cage model, hybrid feed barges, waterborne feeding and a new camera solution (early 2020). The Tube Net, a preventive sea lice solution is also underway to be improved and launched, together with key customers as partners.

In Mo I Rana, at the subsidiary Helgeland Plast, the group has its own manufacturing plant for PE pipes, primarily used in its cage solutions. Now it is a wellfunctioning plant, which also represents an upside with regards to deliveries outside the aquaculture industry. 

The diving and net washing company, AKVA Marine Services, has been through significant investments and restructuring in 2018 and is now looking better than ever, having secured long term contracts as well as having improved earnings significantly during 2019.

Sperre AS, a subsidiary producing ROV’s, is a strong innovation hub. The ROV’s invented for net washing (Flying Net Cleaner) has during a few years become the choice for many of the salmon farmers, and the solution has on an ongoing basis been improved, the latest new launch, being a waste collector which has attracted a lot of interest in the marketplace.

Land Based Technology

It has been an increasing focus amongst salmon farmers to grow larger smolt, before entering the fish into the ocean. Significant investments have been made, and pipeline of projects for large RAS facilities are strong. AKVA group has unique experience and a very strong position to continue to grow in this area. The focus has been on salmon, and to expand capabilities globally. In 2019 the group has taken more steps to join forces in the area under a common umbrella; AKVA group Land Based. Larger contracts have been secured in Norway as well as in Americas during the year. 

Further the concern has followed the development of the investments into full grow out systems closely. The group has learnt lessons previously, delivering such systems for other species than salmon, projects that not always have been a success. As the technology, and foremost, the competence at the customer side has increased, gradually the strategy was developed. Today, the group has a clear ambition to be a preferred partner for such systems for salmon, confirmed by securing a 500 MNOK order with Nordic Aqua Partners, for a facility to be built in China. 

On a negative note, the project execution capabilities have not always proved to be the strongest asset. This became clear in the fourth quarter of 2019, when losses from project cost overruns were revealed, and hit the profits hard. To overcome this, the firm has heightened the bar for internal performance and will invest in resources and competence to avoid such negative surprises for the future.

AKVA Digital

Over the last two years, AKVA has experienced a tremendous shift towards customer interest and willingness to explore new opportunities within digitalization and more intelligent use of data. 

AKVA’s position within the digital area is truly unique, continued Knut Nesse, as we have a large share of the market for sophisticated systems (Fishtalk suite) that provides a complete overview of the biological status from broodstock to harvest. We also have a powerful process control platform named AKVAconnect that enables real-time control of various mission critical equipment such as feeding systems, environmental sensors, barges and cameras typically installed on-site at the farmer’s locations. 

 This new data-driven opportunity is a strong catalyst for flexible and open systems utilizing an architecture that enables new analytical tools (i.e. Feeding Insights) and controlled sharing with data integrity and security as the key building blocks. As a result, AKVA has spent the last two years investing significantly, to modernize our core systems to a cloud- and micro services-based platform with open API’s and mobile applications.

Today, we have a cloud based Fishtalk, modern and open, and have established strong partnerships with key customers to develop apps and modules to fit the need of future salmon farming. We have also completely rebuilt and launched a new AKVAconnect, built on technology from the world leader in process control and automation. 

Late 2018 we announced a strategic partnership with UK based Observe technologies (AKVA Observe). This highly innovative solution uses a patented artificial intelligence (AI) engine and machine vision to offer new insights and recommendations to the fish farmers on optimization for more efficient feeding. The solution is in rapid development with new features in fish health monitoring and biomass calculation in the pipeline and the interest from customers has been overwhelming having resulted in rapid uptake with successful implementations at over 30 farms in Norway, Chile, Canada, Scotland and Australia.

Further, during 2019, we have invested in building a unique cloud-based data platform called PRISMA, with value added applications and data-sharing capabilities to create a new and secure marketplace for the aquaculture eco-system. Development work has been done in partnership with strategic partners and key customers and a full commercial launch took place during 2020.

In the third quarter of 2019 we sold our subsidiary Wise lausnir ehf for a total of around 80 MNOK. Wise was an Icelandic ERP company, delivering and building verticals on Microsoft ERP solutions. It was an effort taking almost two years and I was very happy to see the transaction being completed, enabling us to re-invest the proceeds into new solutions supporting our customers digital transformation journey.

The future

AKVA group, being one of few global, full offering equipment suppliers to the salmon industry is in a very attractive position for future profitable growth. The increased need for marine proteins and constantly challenging demands for sustainability and cost-efficient production methods results in a wealth of opportunities.

The headlines of future salmon farming centres around offshore farming, land-based facilities, closed containment farming and digitalization. AKVA group has competence, willingness and ability to play an important role in the development of the technology and solutions for the future.