Nova Austral ekes out a profit in Q1 2024, ending streak of losses

A Nova Austral facility in Chile
A Nova Austral facility in Chile | Photo courtesy of El Inversor de Chile
4 Min

Chilean salmon-farming firm Nova Austral, which is fighting to stave off bankruptcy, posted a net profit of USD 400,000 (EUR 370,000) in the first quarter of 2024, putting an end to several consecutive quarters of losses, including a USD 43.2 million (EUR 40 million) loss posted in the first three months of 2023.

Revenues in the quarter slipped 7 percent year over year to USD 28.4 million (EUR 26.3 million) for the company, compared to USD 30.7 million (EUR 28.4 million) in the same quarter the year before. Nova Austral attributed the Q1 2024 revenue dip to an absence of smolt sales to third parties. 

Cost of goods sold dropped 17 percent year over year to USD 23.9 million (EUR 22.1 million) thanks to reduced harvest, processing, and packaging costs, the company said in its quarterly results posted on the Oslo Bors.

Additionally, a positive Q1 fair value adjustment of USD 6.6 million (EUR 6.1 million) – compared to a fair value hit of USD 31.1 million (EUR 28.8 million) in the first quarter of 2023 – was due to the company having more biomass at its farm sites compared to Q1 2023. 

The fair value adjustment and declining costs, coupled with benefits from the Navarino Law – a series of tax and customs benefits for industrial companies that operate in southern Chile’s Magallanes Region – more than doubling year over year to USD 4.4 million (EUR 4.1 million), led to positive earnings before interest and taxes (EBIT) of USD 14.3 million (EUR 13.2 million) in the first quarter, compared to a USD 34.2 million (EUR 31.6 million) EBIT loss in the same period of 2023.

Nova Austral’s last 12 months (LTM) harvest increased 8 percent year over year to 13,100 metric tons (MT), compared to 12,100 MT in Q1 2023. Meanwhile, LTM volumes sold increased 10 percent to 14,000 MT, compared to 12,700 MT sold in the first quarter of last year.

During the quarter, the company continued its focus on value-added products, with the U.S. and Europe as its main markets, representing 64 percent and 22 percent of total sales, respectively.

Other quarterly highlights, according to the firm, included the fact that no mortality events occurred, and none have actually taken place during the last 12 months. During Q1 2024, the company had five farm sites operating, and it is planning to stock another four sites before the end of the year.

The company is in the middle of attempting to move its financial reorganization process forward. It was approved in January 2024 but then was suspended in mid-May, with a Chilean court of appeals declaring the firm bankrupt.

On 27 May, Nova Austral requested a freeze order before a court of appeals to prevent liquidation, and on 29 May, the court granted the freeze order to prevent the initiation of the liquidation proceeding. The court of appeal will issue a final ruling on the challenges within the next few weeks, the company said.

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