Scottish salmon producer’s revenues knocked by ‘volatile’ prices
The Scottish Salmon Company reported lower operating revenues for the second quarter of 2015 and attributed the performance to the impact of unprecedented price volatility, fluctuating exchange rates, and lower harvest volumes.
The Edinburgh-headquartered producer achieved revenues of GBP 31.2 million (EUR 42.5 million; USD 47.9 million) in the last quarter, based on 7,329 metric tons (MT) of head-on gutted (HOG) salmon, this was down from revenues of GBP 33.8 million (EUR 46 million; USD 51.9 million) and a harvest of 8,027 MT in Q2 2014.
Contract volumes remain steady and while spot prices were high at the start of the year, they fluctuated significantly in Q2, said the company. In addition to the expected seasonal price variance, the increased volume available in the market had a negative effect on prices.
Its operational earnings before interest and taxes (EBIT) per kg before fair value adjustments decreased to GBP 0.33 (EUR 0.45; USD 0.51) from GBP 0.61 (EUR 0.83; USD 0.94) in Q2 2014.
Meanwhile, logistical synergies achieved in the last quarter were offset by a combination of market factors and biological challenges, which mean its originally forecasted annual harvest volume of 30,000 MT has been revised downwards by approximately 10 percent.
However, the company said its international strategy and focused export drive were successful in Q2, with export levels reaching 49 percent for the first time thanks to increased sales in Europe, North America and a number of emerging markets.
The number of countries it exports to has risen to 24 from 17 in 2013.
“In the face of challenging conditions, which are being felt across the wider industry, these results reflect a stable performance in the second quarter of 2015,” said Craig Anderson, managing director of The Scottish Salmon Company.
“With greatly increased supply, fluctuating prices, a strong pound, and biological challenges, Q2 proved to be a testing period, but our harvest volumes remain on a par with last year and we are confident about long-term future growth.
“Through a continued focus on building long term relationships with our customers, increasing harvest volumes, and developing investment in broodstock and infrastructure, we are confident our long-term business plan will continue to build on our recent momentum,” he said.
Preparatory work for two new sites at Scadabay and Reibinish has now been completed and they are due to be stocked in Q3 2015.
Plans are also progressing for a new processing facility in Argyll & Bute.
Furthermore, a native Hebridean broodstock program is taking a new approach to rear salmon with 100 percent Scottish provenance, which the company believes will provide a unique selling point to global markets.