Improved European sales lift Iceland Seafood International in H1

Published on
August 31, 2021
ISI CEO Bjarni Ármannsson led his company to total sales of EUR 208.3 million (USD 246.3 million) for the first half of 2021, 15 percent higher year-over-year.

The easing of COVID-19 restrictions in Southern Europe and a strong performance in Ireland led Iceland Seafood International (ISI) to total sales of EUR 208.3 million (USD 246.3 million) for the first half of 2021, which was 15 percent higher than the corresponding period of last year.

The Reykjavik, Iceland-headquartered group’s normalized profit before tax (PBT) of EUR 4.8 million (USD 5.7 million) was EUR 2.2 million (USD 2.6 million) ahead of the first half of 2020. Its bottom-line profit of EUR 3.4 million (USD 4 million) was EUR 2.1 million (USD 2.5 million) more year-over-year.

According to the company’s H1 2021 results statement, after a “slow start” in the first two months of the year, sales picked up strongly from March onwards, thanks to stronger demand in the firm’s key markets. In southern Europe, which achieved total divisional sales of EUR 77.8 million (USD 92.1 million) – up 24.1 percent year-on-year – sales in Spain and Italy led the turnaround.

It said that demand in the region’s hotel, restaurant, and catering (HoReCa) sector is recovering but still significantly below pre-pandemic levels, while retail sales are increasing. The company said its Irish operations were “well-prepared for Brexit” and in a “better position” to service local retail customers than suppliers outside the country.

At the same time, the merger and integration of ISI’s U.K. operation continued to be “challenging” during the second quarter, with the process proving more complex and costly than anticipated. However, with its strong customer base in the market and its new Grimsby factory, the outlook and potential for the U.K. business remains strong, the group said.

ISI CEO Bjarni Ármannsson said while Q2 tends to be a relatively quiet period for the group, the same trends were at work during the second quarter as in Q1. 

“We continue to benefit from strong fundamentals in Southern Europe and Ireland, the Sales and Distribution division also showed increased activity and reduced cost which generated good profits. Our U.K. operations had negative results, the reason being a combination of ramping up a renovated factory, dealing with challenging logistics from Southeast Asia and merging two factories in a period of COVID-19 issues and Brexit,” he said. “These factors shape the financial outcome in Q2. Overall, in the first half, we are where we had planned to be when we announced the profit outlook for 2021 in late February. Realizing now that our assumption going forward, i.e. that things would have ‘normalized’ by mid-year, is not what is happening, we are narrowing down the outlook range to EUR 12 to EUR 16 million (USD 14.2 million to USD 18.9 million) in normalized profit before tax for the full year from EUR 12 EUR 17 million (USD 14.2 million to EUR 20.1 million) previously communicated.”

In general, though, the group is reaching its strategic goals of a better balance between retail and foodservice, a stronger foundation in salmon products, and better cross selling of products between the group’s operating entities, Ármannsson said. He also highlighted that the EUR 12 million (USD 14.2 million), 80 percent acquisition Spanish salmon processor Ahumados Dominguez should conclude before the end of the third quarter of 2021. ISI signed a letter of intent to purchase the company in May this year.

“The company owns a premium consumer brand which has a strong foothold in the Spanish retail, primarily within the product category of smoked salmon,” Ármannsson said. “We believe that going forward, the Spanish companies can together gain a stronger market presence overall, both in whitefish as well as in salmon. The acquisition will in particular strengthen the group as a quality smoked salmon producer.”

With regards to the Spanish market, ISI is “ready to take part” in the ongoing consolidation of the seafood sector, Ármannsson said.

“The pace of consolidation in the industry is increasing – to a large degree driven by increased interest of private equity capital. Iceland Seafood sees interesting opportunities in this trend and is well positioned to be proactive when comes to improving the efficiency of the Spanish seafood industry,” Ármannsson said.

With structural changes in ISI’s operations in the United States, it is further focusing management efforts on Europe, Ármannsson said.

“We see clearly that Brexit will bring us opportunities long-term. There is a need for automated efficient processing facilities, close to the consumer base in U.K., the same applies to Europe in general,” he said. “The reliance on China as a production hub for the world is fading. The ongoing megatrend is bringing processing closer to the consumer that is a trend we will benefit from.”

Photo courtesy of ISI

Contributing Editor reporting from London, UK

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