Due to sanctions applied by SMA, Chile’s environmental authority, Nova Austral said it now estimates it will stock between 4.5 and 5.5 million salmon smolts this year, down from its previous projection of between 6.5 million and 7.5 million smolts.
In July 2022, SMA accused Nova Austral of overproduction between 2015 to 2017 at three salmon grow-out centers in the Alberto de Agostini National Park. In response, it moved to revoke the environmental license for those centers and apply a fine for the artificial alteration of the seabed at another center.
“During Q2 2022, we completed the stocking of [sites] A9 (1.1 million smolts) and A2 (0.9 million smolts). Hence, during the first half of the year we stocked 2.3 million smolts,” Nova Austral said in a presentation filed with the Oslo Børs, where it is listed publicly. “Given the sanctions applied by the SMA on our sites Cockburn 23 and Aracena 10, our stocking estimate for the year decreased… [while] our harvest estimated for 2022 continues in the same range as reported in our last call of 14,500 to 15,500 metric tons.”
Nova Austral added that its other farming sites – Cockburn 3, Cockburn 13, Aracena 4, Aracena 1, Aracena 9, and Aracena 2 – are performing as expected, with low mortality rates.
At the end of the second quarter, Nova Austral’s harvest for the last 12 months increased 21 percent to 8,800 metric tons (MT) of whole-fish equivalent (WFE), compared to 7,200 MT WFE in the same period of the prior year. However, Nova Austral’s LTM sold volumes fell to 11,700 MT WFE in Q2 of 2022 from 21,800 MT WFE a year ago, a 56 percent drop. Nova Austral attributed this principally to a decrease in the volumes of raw material purchased from third parties.
The company’s quarterly revenue decreased 42 percent to USD 16.7 million (EUR 16.7 million) versus the USD 28.6 million (EUR 28.7 million) posted in Q2 2021, mainly due to the lower volumes sold, partially offset by 19 percent higher average price per kilogram WFE. In turn, its cost of goods sold decreased 52 percent to USD 16.2 million (EUR 16.3 million), in line with its volume reduction.
During Q2 2022, the U.S. market made up 69 percent Nova Austral’s sales, which the company said is a result of its commercial focus on fresh products and frozen portions. The European Union was the company’s second-largest market, accounting for 26 percent of its sales.
‘“We expect U.S. and Europe will remain to be our main markets, as Nova Austral’s strategic focus on fresh products and frozen portions is oriented particularly to these geographies,” it said.
Other expenses, corresponding mostly to a USD 10.3 million (EUR 10.3 million) loss at Skyring 2 and USD 1.7 million (EUR 1.7 million) in fallow sites costs, dragged on the firm’s bottom line, though they were partially offset by USD 1.4 million (EUR 1.4 million) in insurance recovery. The company’s net financial expenses were 15 percent higher year-over-year to USD 10.6 million (EUR 10.6 million) due to servicing higher debt levels in bonds and a rotating credit facility, but in its cash flow statement, it said inflows from loans, corresponding to an USD 8.3 million (EUR 8.3 million) capital increase made by company shareholders during the quarter, were used to pay suppliers.
Net losses for the quarter more than quadrupled to USD 18.5 million (EUR 18.6 million), compared to USD 4.3 million (EUR 4.3 million) in the quarter from one year ago.
Punta Arenas, Chile-based Nova Austral is owned by the equity funds Altor Fund III and Bain Capital. It posted a net loss of USD 11.4 million (EUR 11.4 million) in the first quarter of 2022, an improvement from the loss of USD 15.2 million (EUR 15.2 million) it saw in the same period in 2021. The company’s revenue decreased 24 percent in Q1 2022 to USD 19 million (EUR 19 million) versus the USD 25 million (EUR 25 million) posted in Q1 2021, mainly due to a 41 percent drop in volumes sold, down 1,900 MT WFE, though this was partially offset by 25 percent higher average prices per kilogram WFE.
The company has been in regulatory trouble since June 2019, when Chile’s National Fisheries and Aquaculture Service (Sernapesca) began investigating alleged underreporting of mortalities and soon thereafter filed three formal complaints against the company for adulteration of information. It has faced additional regulatory scrutiny since then. It recently said that may be forced to close operations throughout the country if sanctions levied by the SMA are allowed to go forward.
Photo courtesy of Nova Austral
