Reduced first-half sales for Iceland Seafood International, but some COVID recovery seen

Published on
September 7, 2020

Although the COVID-19 pandemic has caused significant disruption to the operations of Iceland Seafood International hf (ISI), it saw some signs of a sales recovery towards the end of the first half of the year and continuing into the third quarter, and while the outlook remains uncertain for the remainder of the year, the Reykjavik-headquartered group is positive about the upturn.

For the six months ending on 30 June, 2020, ISI achieved total sales of EUR 183.2 million (USD 217 million), which was 21 percent lower than for the corresponding period of last year. Its normalized profit before tax (PBT) of EUR 2 million (USD 2.4 million) was EUR 3.5 million (USD 4.1 million) behind the first-half of 2019, thanks largely to the reduced sales.

The bottom-line profit of EUR 1.3 million (USD 1.5 million) was EUR 1.6 million (USD 1.9 million) lower than a year previously.

Its results statement highlighted that the hotel, restaurant, and café (HoReCa) and foodservice sectors have been most affected by the crisis, particularly in southern Europe, with its value-added Southern Europe division posting sales of EUR 65.4 million (USD 77.5 million), which was EUR 31.4 million (USD 37.2 million) down on H1 2019.

The pandemic also impacted the sales of its sales and distribution (S&D) division, which were EUR 33.3 million (USD 39.4 million) lower than a year previously at less than EUR 69 million (USD 81.7 million).

However, sales generated by its value-added Northern Europe division were up 13 percent year-on-year to EUR 54.4 million (USD 64.4 million), driven by strong boosts in both the U.K. and Irish retail sectors.

“The first half of the year has brought considerable challenges to our operation, with the outbreak of COVID-19 and actions taken in key markets to control the ramifications of the outbreak on our operations,” ISI CEO Bjarni Ármannsson said. “With easing of restrictions in June, both in Spain and Italy, we have seen a strong recovery in sales during the last three months. In Northern Europe, around 80 percent of our sales are to the retail sector, which saw growth during the pandemic. This is the key driver for good results in Northern Europe which helped mitigating the negative impact of the sales decline in Southern Europe during the period.”  

Meanwhile, ISI signed a letter of intent on 28 August, 2020, to acquire all the issued share capital of Carrs & Sons Seafood Ltd., an Irish seafood processing company specializing in smoked salmon production. According to the LOI, the purchase fee will be around EUR 6.5 million (USD 7.7 million), based on 2019 financial statement and other information provided by the seller. Parties aim to complete the transaction before 30 November, 2020.

“We see this acquisition as a great fit to our current operation in Ireland, and we are confident that this will further strengthen our ability to service the Irish retail market,” Ármannsson said.

At the same time, the project of merging the group’s two U.K. businesses into a single location is on track and is expected to be finalized before the year end.

“Commercial agreements with key retail customers [have] resulted in an expected annual sales growth in excess of GBP 18 million (USD 23.9 million, EUR 20.2 million), which we will start benefiting from in 2021,” he said.

Despite the sales recovery in the third quarter, ISI has reduced the upper end of its profit outlook for 2020 by EUR 1 million (USD 1.2 million) due to “the ongoing uncertainty in key markets.” As such, it is anticipating normalized profits before tax of between EUR 6 million and EUR 8 million (USD 7.1 and USD 9.5 million).

Photo courtesy of ISI

Contributing Editor reporting from London, UK

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