Higher salmon prices, lower costs boost Norway Royal Salmon’s Q3 earnings

Published on
November 11, 2021
Norway Royal Salmon (NRS) has reported operational earnings before interest and taxes (EBIT) of NOK 88.7 million (USD 10.4 million, EUR 9 million) for the third quarter of 2021.

Norway Royal Salmon (NRS) has reported operational earnings before interest and taxes (EBIT) of NOK 88.7 million (USD 10.4 million, EUR 9 million) for the third quarter of 2021, an increase from the NOK 34.8 million (USD 4.1 million, EUR 3.5 million) achieved for the corresponding period of 2020.

The Trondheim, Norway-headquartered seafood firm attributed the rise to higher salmon prices and lower production costs in the three-month period. However, the company’s overhead costs increased to NOK 48 million (USD 5.7 million, EUR 4.9 million). NRS Interim CEO Klaus Hatlebrekke said there were high non-recurring costs associated with NTS ASA’s mandatory offer for the company, as well as incidents at external smolt suppliers that forced it to cull juvenile salmon.

While the culling of smolts has reduced this year's release and will have a negative effect on the harvest volume in 2022, Hatlebrekke said the group was pleased that the production at its new smolt facility in Dåfjord has been good.

“This will secure NRS smolt from next spring,” Hatlebrekke said.

NRS’s operating revenues of NOK 1.5 billion (USD 176.6 million, EUR 152.3 million) were up more than NOK 1.35 million (USD 158,928, EUR 137,050) over Q3 2020.

Its farming segment harvested 11,265 MT of gutted-weight salmon in the quarter, an increase of 12 percent year-on-year, while achieving an operational EBIT of NOK 12.13 (USD 1.43, EUR 1.23) per kilogram, up from NOK 4.21 (USD 0.50, EUR 0.43) in Q3 2020. Overall, NRS sold 23,092 MT of salmon in Q3, down from 27,110 MT a year prior.

Regionally, NRS’ Norway posted an operational EBIT of NOK 105.8 million (USD 12.5 million, EUR 10.7 million) in the quarter, compared with NOK 42.3 million (USD 5 million, EUR 4.3 million) in the corresponding period of last year. Its operational EBIT per kilogram gutted-weight was NOK 12.69 (USD 1.49, EUR 1.29) – up from NOK 4.21 (USD 0.50, EUR 0.43) in Q3 2020.

Farming Norway harvested 8,340 MT gutted weight in Q3 2021, a decrease of 17 percent year-on-year.

Meanwhile, Farming Iceland posted an operational EBIT of NOK 30.9 million (USD 3.6 million, EUR 3.1 million), compared with NOK 800,000 (USD 94,195, EUR 81,227) in Q3 2020. Its operational EBIT per kilogram gutted-weight was NOK 10.55 (USD 1.24, EUR 1.07) compared with NOK 0.30 (USD 0.04, EUR 0.03) a year previously.

The region harvested 2,925 MT of salmon in the quarter, which is 5 percent higher than in the same quarter last year.

For the full-year 2021, NRS expects a total harvest volume of 48,000 MT, split between 36,500 MT from Norway and 11,500 MT from Iceland. These would represent increases of 20 percent for Norway and 55 percent for Iceland compared to 2020. The company’s overall harvest volume for 2022 is expected to be 51,500 MT, with 38,500 MT from Norway and 13,000 MT from Iceland. NRS estimated its smolt releases for 2021 at 11.2 million, of which 8.4 million will be in Norway and 2.8 million in Iceland. For 2022, the smolt release is estimated to be 15.6 million, comprising 12.1 million in Norway and 3.5 million in Iceland.

Hatlebrekke also confirmed that NRS had achieved Aquaculture Stewardship Council (ASC) certification for all of its active farming sites in Norway and Iceland.

And in October, the Iceland Food and Veterinary Authority MAST and Umhverfisstofnun (the Environment Agency of Iceland) advertised their proposal for new farming licenses for the company Arctic Fish for 4,000 MT maximum allowed biomass (MAB) in Arnarfjordur. This is a new license in a fjord and at a site that Arctic Fish has not operated before.

Once the license is issued, the company will hold, 27,100 MT MAB of licenses, comprising salmon licenses for 21,800 MT MAB and trout licenses for 5,300 MT MAB, with the latter in the process of being converted to salmon. In September, Arctic Fish announced it entered into two separate agreements which will expand its smolt facility at Nordur Botn in Tálknafjördur, Iceland. With an estimated cost of EUR 24 million (USD 28.4 million), the project is one of the largest-ever private investment projects in Iceland’s Westfjords. 

In Norway, NRS owns 36,085 MT MAB for salmon farming in Troms and Finnmark. In addition, it has minority interest in two associated Norwegian fish farming companies which together own nine fish farming licenses.

As previously reported by SeafoodSource, following the completion of a mandatory offer period on 26 August 2021, NTS holds shares corresponding to 68.14 percent of the total number of shares and votes in NRS. As the majority owner, NTS intends to merge NRS and Salmonor, a company that resulted from the merger of Midt-Norsk Havbruk AS and SalmoNor AS, two companies that were both 100 percent owned by NTS. Combined, NRS and Salmonor will have a harvest potential of approximately 100,000 MT HOG in Norway.

Photo courtesy of Norway Royal Salmon

Contributing Editor reporting from London, UK

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