‘Unprecedented’ mortalities hit Scottish Salmon Company’s Q3 results
The Scottish Salmon Company recorded a loss before interest and taxes of GBP 12.5 million (USD 15.6 million, EUR 14.7 million) for the third quarter of this year, down from a profit of GBP 716,000 (USD 892,275, EUR 842,386) in Q3 2015, with Managing Director Craig Anderson attributing the result to “unprecedented levels” of fish mortality and lower harvest weights in what is historically a low volume quarter for the industry.
The Edinburgh-based company, which operates sites across the west coast of Scotland, experienced fish losses equating to around 1,300 metric tons (MT) in the last quarter as a result of “industry-wide” gill diseases and sea lice challenges, while harvest weights were down 25 percent on its earlier forecast.
In spite of the losses and compromised growth of its fish, the Scottish Salmon Company achieved revenues of GBP 25.2 million (USD 31.4 million, EUR 29.7 million), an increase of almost 40 percent year-on-year.
The total volume harvested in the period was 5,486 metric tons (MT), up from 5,130 MT in Q3 2015. Overall, the company expects to harvest around 25,000 MT this year – down from the 26,000 MT previously forecast.
Anderson said a similar harvest should be expected in 2017 as the company works through its current biomass challenges, and that cleaner fish and specialists to manage their deployment have now been added to most sites.
“Our immediate priority is to meet the commitments made to our contract partners. With this in mind, we have brought forward 1,500 MT from 2017 to mitigate the impact of reduced volume,” he said.
With regard to the United Kingdom’s decision to leave the EU, Anderson said the company “had seen little impact” to date and that even the fluctuations in the value of the pound have “had limited consequences” as only a small proportion of its sales are made on the spot market.
Nevertheless, a weaker pound would create a more favorable market for growing exports, said Anderson, adding that expanding this part of the business was a priority and that “conditions are ripe” for developing the overseas demand for Scottish salmon.
In Q3 2016, overseas sales accounted for 42 percent of the company’s revenue.
Fiona Larkin, finance director at the Scottish Salmon Company, explained that in the last quarter a larger volume of the company’s key 3- to 6-kg fish went to honoring its contractual agreements, “leaving only limited opportunity to sell on the spot market.”
She said that the aforementioned mortalities resulted in exceptional costs of GBP 5 million (USD 6.2 million, EUR 5.9 million) in the quarter, and added that the biological costs would continue in the coming quarters.
Meanwhile, a new site at Maragay Mor in the Hebrides has been commissioned and work is progressing at a new harvest station.