Despite higher revenue and harvest volumes, Chilean salmon farmer Nova Austral saw losses in the first quarter of 2020.
Nova Austral lost USD 11.3 million (EUR 10 million) in Q1, versus profits of USD 1.8 million (EUR 1.6 million) from one year earlier. Despite a 65 percent boost to top line revenues at USD 38.5 million (EUR 34.1 million), and a 34 percent hike in harvested volume to 24,500 metric tons, higher costs dragged the company’s profits down.
During the quarter, the cost of goods sold increased 25 percent year-over-year to USD 31.6 million (EUR 28 million), while distribution costs doubled to USD 3.7 million (EUR 3.3 million), driven mainly by higher refrigerated storage costs and higher logistics costs due to an increase in sales of fresh products – orders of which the company fulfilled completely “despite suffering some disruptions in air transportation,” according to information Nova Austral submitted to the Oslo bourse.
Further, administration costs were up 72 percent to USD 5.6 million (EUR 5 million), mostly due to USD 3 million (EUR 2.6 million) in legal fees. Fair value adjustments resulted in a decrease of USD 6.8 million (EUR 6 million) due to lower biomass volume and lower prices, versus positive income of USD 8.0 million (EUR 7.1 million) in the first quarter of 2019, further affecting the bottom line.
“We are still committed to steer the company through its pending legal and regulatory matters, and at the same time create a better company for the future,” the company said, referring to the charges filed against Nova Austral last year for false reporting of mortality figures. “The pending legal and regulatory matters are progressing, however with limited developments since last report.”
It highlighted the management changes implemented in April this year, looking to bolster administration, and added that under its joint venture with fellow salmon farmer Trusal - a subsidiary of Salmones Austral – the first site was implemented with 1.4 million smolts in March, while the second site (another 1.4 million smolts) will be stocked in September and the third site (1 million smolts) in March 2021.
With respect to the COVID-19 pandemic, Nova Austral said that salmon sales in general “are going quite well due to uplift in the retail segment globally, but the final outcome of the crisis is yet too early to predict.” Sales to most of its food service customers - some of the company’s largest clients - decreased significantly, but this was offset by an increase in sales to retail, particularly large clients in the US and Europe.
In terms of revenue by market, the US continued to increase its relevance in Nova Austral sales, marking 63 percent during 1Q20 versus 46 percent one year before. Europe continued as the second market in terms of volume but its weighting decreased (19 percent compared to 37 percent), while Asia increased its participation (13 percent versus 3 percent).
Nova Austral is owned by the equity funds Altor Fund III and Bain Capital. Its entire operations are in the Magallanes and Antarctic regions, employing some 800 people directly.
