Pandemic-related logistics issues in the fourth quarter of 2020 pushed down salmon prices, negatively impacting Norway Royal Salmon’s (NRS) revenue.
The company reported operational earnings before interest and taxes (EBIT) of NOK 17 million (USD 2 million, EUR 1.7 million) and an EBIT-per-kilogram of NOK 5.05 (USD 0.60, EUR 0.50) for the fourth quarter of last year. The corresponding figures for the same quarter of 2019 were NOK 136 million (USD 16.3 million, EUR 13.4 million) and NOK 17.71 (USD 2.12, EUR 1.74) respectively.
Trondheim-headquartered NRS said the fourth quarter had been challenging for the NRS’ sales operations, with low margins contributing negatively to profitability, despite being higher than in the previous quarter. At the same time, it saw the effects of the COVID-19 pandemic continue to “significantly impact” the logistics and market for salmon in the period, while its sales volume was 6 percent lower than in Q4 2019.
For the full financial year 2020, the group achieved operating revenues of NOK 5.1 billion (USD 610 million, EUR 501.9 million), down from NOK 5.6 billion (USD 669.8 million, EUR 551.1 million) in 2019. At the same time, its operational EBIT fell from NOK 543 million (USD 64.9 million, EUR 53.4 million) to NOK 246 million (USD 29.4 million, EUR 24.2 million). Its profit after tax for 2020 was NOK 1.1 billion (USD 131.5 million, EUR 108.2 million).
In a statement, CEO Charles Høstlund confirmed the market price of salmon has been affected by the COVID-19 pandemic, and had been low in the reported quarter.
“Our margins in this quarter are affected by this, even though production costs have been reduced slightly from the previous quarter. The biomass in the sea has increased during the quarter and is 15 percent higher than at the end of the same quarter last year. This leads to that NRS has almost fully utilized our licenses at the end of the quarter,” he said.
NRS harvested 7,148 metric tons (MT) of gutted weight salmon in the quarter, which was 13 percent less than in Q4 2019. Although it advises that COVID-19 did not affect production in the period.
For 2020, the harvest volume was 30,509 MT gutted weight and for 2021 the harvest volume is estimated at 40,000 MT, which would represent an increase of 31 percent compared with 2020.
The company’s Q4 report also confirmed that it is now in the final phase of the listing process of Icelandic salmon farming company Arctic Fish on Euronext Growth on the Oslo Stock Exchange. As part of this process, it has increased its stake to 51.3 percent.
Arctic Fish estimates a 2021 salmon harvest of 12,000 MT, but has significant growth potential and could produce approximately 24,000 MT in 2025, Høstlund said.
The NRS group owns 36,085 MT maximum allowed biomass (MAB) for salmon farming in Troms and Finnmark, and 11,800 MT MAB for salmon farming and 5,300 MT MAB for trout farming in Iceland through Arctic Fish. In addition, the group has minority interest in three associated Norwegian fish farming companies which together own 11 fish farming licenses.
Photo courtesy of Norway Royal Salmon
