SalMar posts ‘mixed’ first-quarter results

Published on
May 18, 2018

Good price achievement and a larger harvest helped Norwegian-headquartered salmon farmer SalMar achieve total operational earnings before interest and taxes (EBIT) of NOK 708.1 million (USD 87.2 million, EUR 73.8 million) in the first-quarter of this year, up from NOK 670.7 million (USD 82.6 million, EUR 69.9 million) in Q1 2017. Nevertheless, company CEO Olav-Andreas Ervik said that the opening three months of 2018 had provided “somewhat mixed” results. 

“Price achievement in the quarter was good and operationally all the group's business areas posted satisfactory results. However, higher underlying costs for fish harvested in Northern Norway and lower activity in the Sales and Processing segment had a negative effect on their performance. 

“Our goal is to be the world's best aquaculture company, and having the lowest costs has always been SalMar's clear objective. We are therefore continuously working to control and reduce costs without compromising the welfare of our salmon,” said Ervik.

The fish harvested in Northern Norway had a higher production cost due to frequent delousing treatments in autumn 2017, and SalMar said the harvesting out of these fish would also affect the segment's overall costs in coming quarters. 

While the Sales and Processing segment posted strong price achievement in the last quarter, its earnings were affected by seasonally low levels of activity in the secondary processing area. Furthermore, fixed-price contracts, which accounted for 39 percent of the volume harvested in the period, made a negative contribution in the quarter. Consequently, the segment made an operating loss of NOK 15.3 million (USD 1.9 million, EUR 1.6 million), compared with a loss of NOK 61.3 million (USD 7.6 million, EUR 6.4 million) in Q1 2017. 

The contract rate for Q2 2018 stands at around 50 percent, and for the remaining volume to be harvested in 2018 the contract rate is 36 percent.

SalMar generated gross operating revenues of NOK 2.5 billion (USD 307.8 million, EUR 260.6 million) in the last quarter, up from NOK 2.4 billion (USD 308 million, EUR 260.6 million) in Q1 2017, while the salmon harvest increased from 26,300 metric tons (MT) to 31,900 MT. The EBIT per kg came to NOK 22.21 (USD 2.74, EUR 2.32) in the quarter, representing a fall of NOK 3.29 (USD 0.41, EUR 0.34) per kg from the same period in 2017. 

The company also highlighted that the market price of salmon was NOK 5.52 (USD 0.68, EUR 0.58) per kg lower in the first-quarter of this year than in Q1 2017.

It expects to harvest around 143,000 MT in Norway in 2018 as a whole, with Fish Farming Central Norway accounting for 96,000 MT and Fish Farming Northern Norway for 47,000 MT. The Norskott Havbruk (Scottish Seafarms) and Arnarlax operations are expected to harvest 26,000 and 8,000 MT respectively in 2018.

Contributing Editor reporting from London, UK

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