Welcome to the presentation of Aker BioMarine's Q1 2022. It's me, Matts Johansen, together with my CFO, Katrine Klaveness, that will take you to today's small session here. We will have a Q&A session at the end. You can already now start to send emails with questions to ir@akerbiomarine.com. You can also send questions during the Q&A session at the end. I'm really happy to report that we see good growth for Aker BioMarine, both on revenues and EBITDA for the quarter compared to last year. We have 32% growth in our brand segment, primarily driven by strong Kori sales, our own consumer brand that we sell in the main retail chains in the U.S., but also positive development in our private label business.
Our ingredient business is on par with last year, with good growth in the aquaculture and animal health and nutrition segment, and lower sales in Superba, as expected, on the back of a very strong Q4 last year. We're expecting good growth for Superba in the Q2 this year. I'm also really pleased to report that the Q1 was a record-breaking harvesting production level offshore, with 21,000 tons production during the quarter. That's the highest production we have had in the history of Aker BioMarine in one single quarter. 14% growth on revenue and 19% growth on EBITDA. Katrine will take you through the details of the financials later. Little bit more details on the harvesting side. As I mentioned, it's a record-breaking quarter. Our vessel's been operating without any operational breakdowns or pauses, working really perfectly.
We have also now gotten our new supply vessel and service vessel, Antarctic Provider, into operation. During the last offload, we were offloading two fishing vessels side by side at the same time in Antarctica. That speeds up our offload operations significantly and gives us more fishing days. Also, we have higher harvesting share than we normally have. We are close to 70% of all the catch the Q1 of the year has been done by Aker BioMarine. The drone that we're expecting that will help us search for krill and provide valuable data for us to predict where the krill is at different times of the year will be delivered in the Q3 . Slightly delayed because of components missing from Kongsberg that is developing this together with us.
I would also like you to put attention to the graph on the right, where you can see the development in harvesting levels year by year for the Q1 . As you can see, every single year, we have improved the harvesting level in the quarter. In the animal health and nutrition segment, where we sell our krill ingredient into the aquaculture and pet food segment, we see very strong demand in the quarter. The demand is driven by a raw material boom that we see globally in the wake of the Russia-Ukraine war. We talked to analysts. They expect the situation in the raw material market to last for many years, even if the war in Ukraine and Russia will be resolved quite quickly.
We have fixed prices for our customers only for the H1 of 2022, and we will set soon prices for the H2 . I'm confident to say that we will see growing prices for the H2 and the years to come for the krill segment in the wake of that inflation and price increase we see in comparable raw materials. We have two important new studies documenting the benefits of our product that came out the last quarter, one in shrimp documenting both growth and improved mortality in shrimp farms, and also one in salmon looking at improved growth, improved health, and improved quality of the fillet being produced from the salmon fed on krill. In the Superba segment, we had lower sales in the quarter as expected.
We had a very strong Q4 , but our sales acceleration plan is on plan, and we are planning for good growth in the Q2 . We have significantly strengthened the sales organization during the quarter and throughout the year. These new sales resources will start executing on our growing sales pipeline. We see some challenges in the Chinese market now because of the recent shutdowns due to COVID, where it's really difficult to conduct business meetings with customers and prospects to convert that business. It's unclear for how long that situation will last and how it potentially will impact our sales effort in the coming months and year in China. Also in the last quarter, we presented an important study that documenting the health benefits of krill oil in cardiovascular diseases.
That study has appeared now in more than 1,000 local and regional TV shows across U.S. during the quarter, helping grow consumer awareness and educate on the benefits of krill. We appreciate that it's difficult to evaluate our branded business with the limited information that we are giving you on a quarterly basis. Therefore, we will shed some more light into that business today. It consists of two very different businesses. Both are private label business, which is kind of steady growing, predictable, high EBITDA to cash conversion, and then the fast-growing consumer brand business of Kori that's growing fast, and we're reinvesting in that type of growth.
When you put these together, the profitability wipes each other out, and I think it's important to look at those isolated to really understand and evaluate those businesses. This is the picture that you see typically in our reporting. This is the consolidated view on both Kori, or Epion, which is a company that owns Kori, and Lang, which is the private label business. On the revenue side, it's fine. I mean, there we see it stacked on top of each other. On EBITDA, basically the investment in Kori wipes out the profits from the Lang private label business. As you can see, look at, for instance, last 12 months after the Q1 , it's more so basically, it's wiping everything out. We'll now show you those two businesses isolated, helping you evaluate those businesses also separate.
Looking at the Lang business. The Lang business is an interesting business. It's stable, good high growth year over year. On average, 20% growth the last eight years. It has, as mentioned, a very high EBITDA to cash conversion, almost one to one. There's no CapEx in that business. It has predictable margin and growing EBITDA coming out of that. We have the biggest retail chains as customers, so it's a predictable, stable, good business. Kori is quite different. Kori is a fast-growing consumer brand product that we sell, you know, through all the main retail chains in the U.S. As you can see on the left side, the growth has been quite tremendous, the last couple of years, and also the last quarters, as you will see more details of later.
For Kori, we're investing all the profit and more into marketing to grow that category, to grow that business. We like to look at marketing like investments, investment in brand equity in consumer base. From an IFRS perspective, those investments will be booked like OpExes, and that's what they've done. I think it's important to look at that like investments, and we will continue investing as long as we have good growth. I'm going to now show a little bit more details of the dynamic of this business, starting with a very interesting situation Aker BioMarine has by being vertically integrated throughout the whole value chain. That's quite unique for a branded company. The way it works, if you look at this slide here, is that Aker BioMarine, the ingredients out of Aker BioMarine make a krill oil.
We sell that krill oil with a good margin to Lang, our daughter company. Lang will encapsulate that krill oil, put it into packaging, develop the products, and distribute it to the retailers, and add a decent margin for that when they do that service for Epion, our company that owns our Kori brand. Then Kori will sell out those products to retailers or directly to consumers with good margins. We're basically stacking up margins throughout the value chain compared to most other brands that are just collecting the margins from the final product coming out to retailers or consumers. There's another interesting aspect of this, and this is that basically we are the leader in the market.
If we invest with Kori in marketing and the consumer walks into Walmart to buy a product, and he ends up buying the competing product of Kori, which is Walmart's private label, we are also delivering that through Lang with the oil from the ingredients Aker BioMarine. Again, stacking up margins, not as long kind of stack as if we sell Kori, but still stacking up two levels of margin. Even if that consumer goes online and buys a small e-commerce brand on Amazon, most likely we have sold the krill oil to that brand, also getting margin from that business. Whenever the consumer goes in to buy a krill oil product, we will get the margin for it. That puts us in a unique situation when it comes to marketing investments.
All other classical brands, when they invest in marketing, they will have leakage to competition. We have leakage to kind of our own different parts of the businesses. Okay, let me tell a little bit more about the dynamics on the private label side of our business. This is a business where we are developing, manufacturing, distributing, owning the label for, the big retail chains' own brands within dietary supplements. Take Walmart as an example. They have a krill oil product on the shelf under the Walmart brand. It's us that's been developing that. We've been developing the label, responsible for the label, and we're pushing it out to all their retail stores.
Our private label business are focused on the seven biggest retail chains in the U.S., and we have deep relationships, good insights, have all the contacts and all system integrations to these large retailers with a long history of delivering high service levels. Through this operation, we have capabilities for product development, manufacturing, marketing, distribution into those retailers. A quite unique setup. As you can see on the graph to the right, you can see what type of customers we have. These are the biggest retail chains in the U.S., covering about 85% of all retail sales in that market. That's a very valuable platform for a company like Aker BioMarine to have.
Krill is still the most important product that we sell through this private label channel, but we're also selling other ingredients where we have a unique position and with ingredients that typically have a strong underlying growth. Why is private label business attractive? It's changing, especially in the U.S. these days. It's going from being a pure kind of financial tactics to being strategically important for the retailers. They're treating companies like Aker BioMarine as partners in developing that type of business. There's a couple of reasons for why it become strategic.
Number one is that there's a trend that the stores in the U.S. is becoming larger and larger, giving more shelf space, allowing the retailers to put more brands on the shelf, and then they prioritize their own brands. Number two is that the pressure the retailers see from digitalization from Amazon, from e-commerce, forces them to develop a better value offer. Private label typically is more or less half-price as a brand. This is a good way for the retailers to compete and with a more efficient value chain of e-commerce. Also, consumer behavior is changing. Millennials, they're focused on getting value. People are more open-minded to try out new products, new brands, and also the perception of quality from private label is improving, as you can see on the graph on the right. This is an attractive place for us to be.
We are partnering with the largest retail chains, giving us a vehicle to expand further on the most important sales channels in the U.S. Now let's talk about Kori. It's quite an amazing story. Two years after the launch, we have Kori now one or more products in all the major retail chains in the U.S. That's quite unique. You don't find many brands that in such a short time get such a large distribution. What's the reason for why we're able to achieve that? The number one reason is what you can see illustrated to the right and what I explained with the value chain. The retailers acknowledge that the fact that Aker BioMarine is, it's vertically integrated is the leader in the market will allow us to invest more in marketing than a traditional brand on the shelf in retail.
Investments in marketing is the most important thing retailers are looking for. This is the reason why they have all come and embraced Kori and putting it on the shelf. Let's talk about that marketing for a while. The first year after launch of Kori, we invested $15 million in marketing. Is that a lot or not? I mean, it's more than 2 billion impressions. That means that the Kori messaging hit 2 billion consumers in the US. Okay, is that a lot? Actually it's 76% of all consumer education, all marketing in the entire omega-3 category in the US. We are the only one driving consumer education and marketing in that important category for the retailers. That's important for retailers.
Two, as you can see on the bottom left corner, the customers that we are bringing into the stores through that type of consumer education are valuable consumers for the retailers. On average, the Kori buyers are buying 17% bigger baskets. You know, the total bill they get when they buy is 17% bigger than the average customer, so bringing high-value consumers into the stores. We are addressing a big market where there is a need of this type of product. Cardiovascular, preventable cardiovascular disease is still the number one cause of death in the U.S. More people die from that than COVID over the last two years.
70% of the U.S. population is deficient in omega-3, and the science is undisputed when it comes to the fact that that's a link between omega-3 levels in your diet and the risk for cardiovascular disease. Actually, 93% of the American consumers knows that omega-3 is good for you. That means if you look at the bottom right corner, 2.4 million households are buying regular krill today, which is a big number. It's half of Norway's population, but it's still only 1.9% of the American households. Given the importance of the product, the fact that there's a need and consumers know it has a benefit, driving consumer education and marketing is important to tap into that market. Kori is a brand platform, which means that we will launch more products in the future.
This year we're launching two new products. We're launching a gummy bear product targeting for those people that want to have a krill product, but they struggle with capsules. Could be children, could be elderly or others that don't like swallowing capsules. We're also launching a new product, which is a formulation of krill and some other ingredients positioning us in the fast-moving brain health segment. These products will start to come out towards the end of the year, both online and in selected stores, and then further growth in the years to come. If you then look at that kind of decoupled view on the Q4 of our business, you can see that out of about $30 million of branded revenues, we have more than $5 million in Kori. That's quite significant business.
As you can see on the right side, we are investing more in marketing on Kori than the profits coming out of Lang. When you look at the P&L of Aker BioMarine for the Q1 , looks like the brand is basically providing no value. As you have heard from the presentation, it really does. Longer term, when it comes to brand, we have a growth plan in three, with three focus areas. Number one is to continue to build on those, that strong relationship we have with those seven retailers. During COVID, we were getting excellent service level. We were one of the best suppliers to those retailers, making sure product stayed on the shelf even if the supply situation was difficult. That's giving us trust, putting us in a stronger position to get more products in the future.
Number two is that we will expand the product portfolio through those retailers. Looking at the different type of supplements, but also looking at different type of categories where we can utilize the capabilities that Aker BioMarine and Lang has. Last but not least, we're gonna grow our own branded business, Kori, that you have seen today, both to drive the category, but also because it's a very attractive position to be in that generates a lot of value for Aker BioMarine's shareholders. Now let me give the word to Katrine that will take you through the financials.
Good morning. I will take you through the financial figures of the Q1 2022. For Aker BioMarine, Q1 is usually the lowest quarter in the year with low or zero Aqua margin and seasonality in both the Aqua markets and in brands. For brands, Q1 marks the last quarter in the cycle of the planogram shelf setting where before the retailers are resetting their shelves with new products in the Q2 . Q1 2022 came in more or less on par with market consensus at $57 million in revenue for the group and $8.1 million in adjusted EBITDA. There were no EBITDA adjustments in the quarter, so EBITDA equals adjusted EBITDA. Compared to Q1 last year, revenue is up 14% due to increased sales in the brand segment, and EBITDA was up 19%.
The main reason for the EBITDA increase is the realization of gross margin between the ingredient and the brand segment that have been built up as ingredients have sold products to the brand segment and is now released when the product is sold out of brands to external retailers. That amounts to the $3.7 million you will see in the financial figures. Net interest-bearing debt is $324 million, up $10 million from last quarter, Q4 last year, and $30 million higher than same period last year. Moving into the ingredient segment. For the ingredient segment, both revenue and EBITDA were on par with same period last year.
Revenue mix has shifted from 60% krill oil in Q1 2021 to 40% krill oil in Q1 2022, which has a negative effect on gross margin, reducing it from 41% to 32%. However, lower SG&A contributes to an EBITDA margin of 23%, only slightly below last year's Q1 at 24% EBITDA margin. QRILL was up 38% compared to Q1 last year, driven by high QRILL Aqua sales. We see strong underlying demand in the market with the expectation to raise prices throughout the rest of the year. Superba was down 33% compared to Q1 last year. This quarter was low, as communicated, partly due to some orders that were pushed into Q4 last year and the ongoing hiring and ramp-up of the new Superba sales organization. Shifting over to the brand segment.
The brand segment had a strong quarter with sales of $31 million, 32% above same period last year. This is mainly due to sales growth in the Kori brand, both in Lang and Epion, but also Lang's private label business, Kori, showed growth with 14% from same period last year, driven by increased sales to Costco, CVS, and Sam's Club. As a result of the Kori growth, krill amounted now to almost 30% of the total Lang portfolio, compared to 21% same period last year. As shown earlier, Kori had a strong development with sales increasing 4.5 times from Q1 last year and 18% from Q4 last year. The national rollout in Sam's Club and Costco, including pallet promotions in the Q1 , drove sales up.
Gross margin for the segment was 25%, on par with same period last year, and EBITDA was at -$2.5 million or -8%, driven by a quarter with high marketing spend to support the full launch to Costco and Sam's Club. Marketing spend in Epion for the quarter was $3.5 million. The earlier mentioned realization of the margin between the segment, it's not reflected in any of the segment figures shown here, but shows up as a positive elimination or an adjustment in the group consolidated statements in the report. In the spring of 2020, the company bought fuel option contracts for the period 2021 to 2024 for 100% of its expected fuel volume consumption.
The call option contracts are linked to the Rotterdam MGO index with strike levels at $409 per ton in 2022, $550 per ton in 2023, and $580 per ton in 2024. The current Rotterdam MGO price has been above $1,000 per ton for the past month, indicating savings of between $12 million and $13 million for the full year if we assume that the Rotterdam price stays at about $1,000 per ton for the rest of the year. The spread between Rotterdam and Montevideo comes on top and is expected to be between $150-$200 per ton. Moving into some detail on a couple of the P&L items.
The additional margin from sales between ingredients and brands is included in the group's COGS as a positive element, reducing the COGS, leading to an increased gross profit of $3.7 million in the quarter. This is affecting the EBITDA 1-to-1. SG&A for the group is up from last year, but the increase is coming from the brand segment with high marketing spend in Epion and high inflation in the U.S. overall. The ingredient segment is, on the other hand, down $2 million despite higher production volumes and increased freight costs. Net financial items show a negative development compared to same quarter last year due to a technical gain from our fuel option contracts last year when we shifted over to hedge accounting. As said earlier, there were no EBITDA adjustments items in this quarter.
I would like to draw your attention to the following balance sheet items. Inventories have built up significantly last year due to the high performance in the Houston factory. Of the $155 million, approximately $120 million sits with the ingredient segment, where we currently have inventory with a gross margin of above $120 million. Derivative assets. This is the mark-to-market value of our fuel option contracts, and the number shows a significant increase, up from $12.5 million in Q4 last year to $25.5 million in this quarter due to current high oil prices. Assets held for sale. This item contains AION, as we are in the process of getting new investors in, and we expect this to happen relatively soon. Finally, equity.
The increase is mainly due to OCI, other comprehensive income, from our fuel option contracts of $11.8 million, netted against the net loss from the quarter. Equity ratio remains solid at 48%. Finally, a look at the cash flow statement. Cash flow from operations improved to -$3.1 million from -$16.9 million last year. Change in working capital has improved compared to same period last year due to reduction in accounts receivable in the period, as well as a refund of ethanol tax from the US government of $6.2 million for the years 2019 to 2020. This is offset by inventory buildup. Limited CapEx investments in the quarter of $7.4 million compared to last year, where the company took delivery of Provider in February.
A net amount of $18 million has been drawn under the debt facility, including loan repayments under the Endurance term loan. Net cash flow from the period was $7.9 million. That concludes the financial section, and I will move over to the outlook and targets. We maintain our 2022 targets of revenue growth of 20%-25% and adjusted EBITDA margin of 20%-25%. In addition, a plant shutdown in Houston will be carried out from June 2022, and at least for the remainder of the year. The shutdown will not impact sales. We will now move over to the Q&A session. You can send your questions to ir@akerbiomarine.com.
Thank you, Katrine and Matts. Let's start off the Q&A session with a few questions from Ole Martin Westgaard in DNB Markets. Can you comment on where you see price inflation for your products in the H2 of the year? Or what is the level seen in this sector as of now?
Yeah, I think it's too early to comment on that. We are working through the strategy for that as we speak, so I can't comment on those expectations. We see generally, and if you can index all the ingredients used in the salmon industry, you see price inflation of close to 70%. We're not expecting that level for QRILL Aqua, as we're not a commodity, but we will definitely see a more kind of permanent lift of the value of the product in the H2 and the years to come.
Thank you. Following up on how does your harvesting figures year to date compare to last year?
I think if you look at the presentation, you see we are 6% higher than last year, and which also was a quite good quarter, the Q1 last year. I think if you see where we have struggled in the difficult season, it's actually been the coming quarters now, not so much the Q1
Following up with Ole Martin Westgaard, what insights do you have into the sales out of the stores for Kori in the US?
We get insights. That's going according to plan and well. We have a successful pallet promotion in the Q1 . So far, so good. I would like to comment that you will see fluctuations in the Kori sales quarter by quarter, because now in Q1 , we fill up the stores. We did pallet promotion. In the Q2 , we're not planning big pallet promotions, so then sales will go down. Then there's pallet promotion coming Q3 again. It will go a little bit up and down through the different quarters.
Rounding off his section with on the Ukraine situation and the sanctions, is there a risk that this could impact your harvesting?
So far it hasn't impacted the operation. We're still running as planned. We're still able to pay salaries to our people and actually fly people in and out. We don't see right now that it will impact our operation, but we're monitoring it closely and are ready to come and take action if things changes.
The last one there on follow-up on that. What are your plans for next year regarding this?
2023 and beyond, I guess.
Yeah
It's the question. We will have to see what the situation looks like. I think this is hard to plan around this situation. We're focused on it on a weekly basis to make sure that we are on top of things.
Thank you. Moving over to three questions from Carl-Emil Kjølås Johannessen, Pareto Securities. Can you give some more color on the lower SG&A in ingredients? Should we expect current level to continue going forward?
We worked hard on cost, fighting the cost inflation that we see. We have several supply items where we see significant cost increase, so we are expecting some higher costs in the years to come, but at the same time trying or working hard with negotiating with key suppliers. We will see somewhat a higher cost level, not to mention because we will also increase sales and production going forward.
Second question from Carl Emil. I guess you touched a bit on it, Matts, but should we expect the sales from ingredients to brands and from brands to external customers to be fairly stable going forward, implying limited contribution from the adjustment segment?
I think you will see that fluctuation that you saw now in the Q1 and the other way around in the last quarter. Kind of on an average basis, it will net each other out, but it will go up and down.
Last question from Carl-Emil Johannessen. Any specific reason for the weaker fisheries in April compared to average Q1, and do you expect record high volumes also in Q2 compared to the Q2 historically?
Yeah. I think in the beginning of April, we shifted fishing areas. We went from 48.2-48.1, and also did a large offload. We lost a couple of fishing days in the beginning of the month related to that. That's impacting the April figures. I think what we see so far is that it looks like what we define as a normal season, which is between 55,000-60,000 tons of production. Again, it's nature, so we will have to get the krill up before we can conclude.
There are no further questions from the emails, so I suggest we round off. All right. Thank you.
Thank you.