Iceland Seafood International hf (ISI) saw its sales ease off in March as COVID-19 disrupted operations, although its retail earnings strengthened and helped diminish the overall impact of the pandemic.
According to the Reykjavik-headquartered group’s first-quarter 2020 results, sales for the opening three months were down 11 percent year-on-year to EUR 107.3 million (USD 117.5 million) despite being on-track during January and February. It achieved a normalized profit before tax (PBT) of EUR 2.6 million (USD 2.8 million), compared to EUR 3.5 million (USD 3.8 million) in Q1 2019. The bottom-line profit of EUR 1.85 million (USD 2 million) was in line with a year previously.
The hotel, restaurant, and café (HoReCa); and foodservice sectors – particularly in southern Europe – were the most affected by the crisis, with earnings in the category down 14 percent year-on-year. However, good sales to customers in the retail sector and strong fishing of squid in Argentina have helped offset the situation.
In ISI’s Value-Added Northern Europe division, Q1 sales were 10 percent up on the same period last year, including a 28 percent growth in U.K. retail sales; while sales achieved by its Sales and Distribution division were EUR 16.2 million (USD 17.7 million) lower at EUR 39.9 million (USD 43.7 million). That drop was blamed on poor weather in Iceland which affected supply and transportation in the first two months of the year.
“The results of Q1 2020 were marked by the outbreak of COVID-19 and actions taken to control the outbreak. This did especially impact the business in Southern Europe, where overwhelming part of sales are to the HoReCa sector, which was heavily impacted by the lockdown implemented in March,” ISI CEO Bjarni Ármannsson said. “On the other hand, our retail sales have been strong from mid-March which has helped [mitigate] the overall impact.”
Ármannsson highlighted that within the last quarter, the acquisition of Elba Seafood was completed, which is expected to strengthen ISI’s position in southern European markets, while the merged Iceland Seafood Iberica started operations. At the same time, investment was announced for additional processing and cold storage capacity in Grimsby, United Kingdom.
He also confirmed that the two U.K subsidiaries, Iceland Seafood Barraclough and Havelok, will be merged this year under one management team and with a single manufacturing side. Between GBP 5 million (USD 6.1 million, EUR 5.6 million) and GBP 6 million (USD 7.3 million, EUR 6.7 million) will be invested in the site.
“We are in active discussion with key retail customers on new listings in the autumn and Q1 2021. [The] product range will reflect current offerings but on a larger scale,” Ármannsson said. “In order to be the sole shareholder of the merged entity, a 33 percent minority share in Havelok held by the management was acquired on 4 March.”
Looking ahead, COVID-19 will continue to impact sales and profitability in the second quarter, Ármannsson said.
“The group base scenario expects sales to bottom [out] in Q2, start to recover in Q3 and to be on track in Q4. Based on this view, the group estimates the full-year 2020 normalized PBT to be in the range from EUR 6 million to EUR 9 million [USD 6.6 million to USD 9.9 million]," he said. "Uncertainty remains significant on development of the pandemic and for how long sales and profitability will be impacted by the situation. We will communicate further on the matter and narrow the outlook range as less ambiguity will be on the development.”
Ármannsson added that while COVID-19 has posed challenges to the company, it has also brought up opportunities that he expects ISI can capitalize on.
“Whilst the current situation is bringing on some significant challenges, we as a group are also in unique position to act on opportunities that come up in the situation, which we are actively working on," he said. "This applies to both short-term opportunities related to sourcing and marketing and also longer-term strategic opportunities.”
Photo courtesy of Ververidis Vasilis/Shutterstock
