Salmones Camanchaca reported 58.9 percent lower earnings in the first-half of 2020 compared to the same time period in 2019, hurt by the lowest salmon prices since 2015, brought about by the global COVID-19 pandemic.
The Santiago, Chile-based company recorded a loss in net income terms for Q2 2020 of USD 16.4 million (EUR 13.9 million), and its earnings before interest, taxes, depreciation and amortization for the second quarter as a loss of USD 5.8 million (EUR 4.9 million). The hit was caused by lower demand, especially from the foodservice sector, resulting in salmon prices that were on average USD 1.89 (EUR 1.60) lower per kilogram, according to the company. It also tabulated its losses from a mass salmon mortality event at its Islotes farming site at USD 4.1 million (EUR 3.5 million). The incident, which took place in May, saw difficult weather conditions kill off 30 percent of its Atlantic salmon at the site, and an estimated additional 38,316 fish escaped, though nearly 10,000 were later recaptured. The company initially estimated the impact of the Islotes losses would be USD 2.9 million (EUR 2.5 million).
“The sharp fall in market prices has of course affected our sales and profitability in the short-term, but we remain confident about the position of Salmones Camanchaca and on the beauty of salmon as a highly nutrient and exquisite food. As a leading supplier of Chilean high-quality salmon, we are ready to serve the growing market for Atlantic salmon for many years to come. In the meantime, Salmones Camanchaca is financially healthier than ever before to navigate through COVID-19,” Camanchaca Vice Chairman Ricardo García said in the earnings release. “Despite sanitary and economic crisis, the Company continues with its business strategy, prioritizing value-added products that allows to adapt to a shifting demand, and promoting sustainable salmon farming through all the value chain.”
There were a few bright spots for the company, with its harvest of Atlantic salmon up 49.5 percent from Q2 2019 to 10,670 metric tons (MT), and “substantially higher sales volume,” the company said in its results. Additionally, Camanchaca’s live fish costs were down 21.5 percent over Q2 2019, to USD 3.32 (EUR 2.82) per kilogram, which is 21.5 percent lower than Q2 2019, but still 11 higher than company’s long-term goal of USD 3.00 (EUR 2.55) per kilogram. Despite the challenges, the company’s total revenues still rose to by 3.6 percent in the quarter.
The company’s processing costs also dropped in the quarter to USD 1.13 per kilogram – 17.5 percent lower than Q2 2019, but 13 percent higher than the firm’s long‐term goal of USD 1.00 (EUR ) per kilogram, which the company attributed to lower processing volumes, direct costs of employee health protection measures caused by the pandemic, and larger fraction of value‐added products.
However, those factors were offset by lower prices in the quarter due to weak foodservice demand. its earnings before interest, taxes, depreciation, and amortization (EBITDA) for the second quarter were actually a loss of USD 5.8 million (EUR 4.9 million), down from USD 10.5 million (EUR 8.9 million) in Q2 2019. Its first half EBITDA was USD 9.3 million (EUR 7.9 million), 58.9 percent lower than same period in 2019.
"When uncertainty prevails everywhere, and organizations face unprecedented pressures on markets, costs and investment spending, Salmones Camanchaca reiterates its commitment and respect for the environment, the wellbeing of communities, and its low costs goals both at seawater and in processing. Despite the higher turbulence of today’s waters, the horizon has not changed, and the ship has not lost its course. Short term lack of profitability serves us a purpose: to become as effective and efficient as ever before, and in everything we do." said in concluding the executive.
The company estimated its harvest volumes for the year to reach 51,000 to 53,000 MT for Atlantic salmon and 3,000 tons for coho salmon, but said its employees’ health and safety was taking first priority through the pandemic.
“COVID-19 is still around us, and therefore our people’s safety remains a high priority,” García said. “With that, Salmones Camanchaca will preserve its business continuity and deliver high achievements soon. I am pleased to report that all sanitary and protection measures across the organization are proven effective and consequently, there are so far only 1.5 percent COVID-19 cases in Salmones Camanchaca, and operation has been running throughout these pandemic times.”
The company’s total assets decreased by 9 percent, or USD 36.5 million (EUR), declining to USD 371.2 million (EUR 315 million) at the end of Q2 2020. It recorded a negative investing cash flow of USD 4.6 million (EUR 3.9 million) in Q2 2020 and a negative financing cash flow of USD 11.9 million (EUR 10.1 million), due to dividend payments of USD 16.9 million (EUR 14.3 million), which were partially offset by drawing down USD 5 million (EUR 4.2 million) from short-term lines of credit.
“This reduction is aligned with the reduction in the investment plan as a preventive measure to strengthen the company’s net cash position and secure its operating continuity during the extraordinary conditions triggered by the pandemic,” the company said. “Salmones Camanchaca postponed investments and non-essential expenses, thus reducing its investment plans from April to December 2020 by approximately 50 percent.”
Photo courtesy of Camanchaca
