Is Andfjord Salmon running out of money?

Greetings comrades. The next installment of my blog for your reading pleasure. This is a short one - let me know what you think.

As I mentioned last week, I have been tuning my ChatGPT financial analysis tool and having it digest quarterly reports for salmon companies as they roll in.  I uploaded the Q4 2024 reports for Salmon Evolution and Andfjord Salmon this morning and used it to perform a liquidity and covenant risk analysis for both companies. The results were interesting – here they are:

ChatGPT Liquidity and Covenant Compliance

I was a little surprised by its assessment of Andfjord’s position and requested further analysis of their cash flow position. Here are the results:

Chat GPT Cash Burn Calculation

Again, I was surprised by these findings, so I cross-checked the figures used with the Andfjord report, and they are correct. In a first attempt, the system had used a figure from Salmon Evolution in one of the data points - it can make this kind or error frequently, so it pays to challenge the system and double-check the results.

I was concerned that this system was overlooking potential revenue from biological inventories, but a quick look at their balance sheet confirmed that they are not showing any swimming inventory, so there is no relief there. I went back to check the Q3 2024 and was surprised to note they had no swimming inventory then either. The Q3 report boasts of impressive biological results for their first crop of salmon, so I had erroneously assumed they were currently farming a reasonable amount of fish. My bad for not checking and a credit to Chat GPT for identifying an issue where I had a blind spot.

Apparently, there is an extraordinary shareholder meeting on March 13th to approve a private placement of $600m NOK. Absent any livestock, though, am I wrong in concluding this will only buy them 6 months of runway? The new financing could provide liquidity to re-stock their facility and buy feed if they are mostly complete on capital projects, but it will take at least 12 months to produce harvestable salmon. How will they last that long? Is another infusion of cash in the works? Their Q4 2024 report notes 60m NOK in undrawn credit facilities which could extend their runway another few weeks but, at their current burn rate, it won’t buy them much time.

The Andfjord Q4 2024 presentation is only three pages long so I’m not able to comment in any depth on their plans to navigate this challenging period. Perhaps they have plans to dramatically scale-back capital spending in favour of building biomass? No idea really but it I were an investor, I’d be asking lots of questions.

Thanks for reading. Comments, corrections, feedback can be provided in the comments section below, via LinkedIn or email at Info@AlanWCook.com.