High inflation rates impacting new farm projects

AquaBounty is slowing down the construction of its new farm and AKVA has seen a reduction in profitability due to high inflation rates.

High inflation rates impacting new farm projects
Source:  AKVA Group.
August 10, 2022

AquaBounty has decided to slow down the construction of its farm in Pioneer, Ohio temporarily in order to evaluate the current economic forces that are driving both inflation and interest rates higher. 

“Since our estimate for construction of the farm currently exceeds our previous range of USD290-320 million, we will review all options for reducing cost, including potentially phasing the construction of the 10,000 metric ton farm with an initial production output level that would demonstrate our competitive advantage and ability to operate at commercial scale. We believe this is a prudent move and will allow us to re-estimate remaining construction costs and thus avoid locking in contracts, commodity pricing for materials or interest rates at what may be their peak,” said Sylvia Wulf, CEO of AquaBounty. 

Profitability reduction for AKVA

AKVA group is expecting a strong revenue in Q2 22, representing an increase of 9% compared to Q2 21. However, the profitability is significantly impacted by increased costs from high inflation rates, and warranty and cost provisions. 

High inflation rates and supply chain restrictions worldwide driven by the Russia-Ukraine conflict with an estimated NOK 37 million in additional costs are one of the main causes. Continued uncertainty related to supply chain restrictions and cost inflations may impact the profitability for the rest of 2022, the company said.