Norwegian-headquartered salmon farmer SalMar ASA delivered total operational earnings before interest and taxes (EBIT) of NOK 658.1 million (USD 70.1 million, EUR 64.4 million) in the fourth-quarter of last year, down from NOK 934.8 million (USD 99.6 million, EUR 91.5 million) in Q4 2018.
Delivering the group’s latest results, SalMar CEO Gustav Witzøe said the fourth-quarter was “weaker than expected,” and that this was largely attributable to Fish Farming Central Norway, its biggest business segment, harvesting a large volume of salmon at the start of the quarter when the spot price was at its lowest point.
At the same time, Witzøe said it was satisfying to see that the Fish Farming Northern Norway segment had posted substantially better results after several weak quarters.
SalMar generated gross operating revenues of NOK 3.2 billion (USD 340.9 million, EUR 313.2 million) in the last quarter, an improvement of NOK 86 million (USD 9.2 million, EUR 8.4 million) on Q4 2018. Its harvest for the three-month period totaled 40,300 metric tons (MT), down 200 MT from a year previously, while the operating EBIT-per-kilogram came to NOK 16.31 (USD 1.74, EUR 1.60) – a decrease of NOK 6.80 (USD 0.72, EUR 0.67).
Fish Farming Central Norway harvested fish that was transferred to sea farms in the autumn of 2018 earlier than planned at the start of the fourth-quarter 2019 to reduce the biological risk posed by salmon lice.
This had a negative impact on average fish weight and costs and resulted in weak price achievement in a quarter when salmon prices rose by 46 percent from October to December, SalMar said.
The segment harvested a total of 24,400 MT of salmon in Q4 2019, compared with 28,200 MT a year previously. It harvested a total 95,300 MT of salmon in 2019 as a whole.
SalMar anticipates a lower harvest volume and slightly higher costs in this segment in Q1 2020.
As expected, Fish Farming Northern Norway achieved a lower level of costs and a higher harvested volume than the quarter before. This was due to larger volumes, and harvesting of fish from sites with a better biological performance.
The segment harvested around 13,400 MT of salmon in Q4 2019. This is an increase of 1,200 MT compared with the same period in 2018, and up from 5,400 MT in Q3 2019. It harvested a total of 48,000 MT in 2019 as a whole. And stable costs and a similar volume are expected in the current quarter.
Meanwhile, SalMar’s majority-owned Icelandic producer Arnarlax ended 2019 with a positive quarter, driven by good biological performance and better capacity utilization at its harvesting plant. It harvested 2,600 MT of salmon in the last quarter, compared with 2,000 MT in Q4 2018.
For the year as a whole, Arnarlax achieved a 46 percent increase in the volume harvested and posted an EBIT-per-kilogram of NOK 10.21 (USD 1.09, EUR 1.00), compared with an EBIT-per-kilogram loss of NOK 11.82 (USD 1.26, EUR 1.16) in 2018. It expects a higher harvest volume and higher costs in the first quarter 2020 due to harvesting out the 2018 generation following increased mortality in a demanding period, which was caused by winter storms at the start of the year.
SalMar’s Sales and Processing segment made an operating profit of NOK 7.5 million (USD 799,044, EUR 734,086) in the last quarter, down from NOK 79.4 million (USD 8.5 million, EUR 7.8 million) in Q4 2018. This decrease was partly attributed to lower capacity utilization at the harvesting plant as a result of a lower volume harvested. Profits were also affected by a lower positive contribution from fixed-price contracts, resulting from a rising salmon spot price through the quarter.
In the fourth-quarter 2019, contracts covered 20 percent of the volume. For Q1 2020 and for the year as a whole, the contract rate stands at 30 percent and 20 percent, respectively.
SalMar expects to harvest a total 152,000 MT of salmon in Norway in 2020, which is unchanged from its previous forecast. This should comprise103,000 MT from Central Norway and 49,000 MT from Northern Norway. It has also raised its harvest expectations from Iceland by 2,000 MT to 12,000 MT. Norskott Havbruk (Scottish Seafarms) is expected to harvest 26,000 MT in 2020.
The group has also announced the appointment of Håkon Husby as SalMar’s new head of investor relations. Husby, who has worked for the company since August 2018, will take up the role on 1 March 2020.
Photo courtesy of SalMar
