Chilean salmon farmer Nova Austral posted a USD 4.6 million (EUR 4.1 million) loss in the fourth quarter of 2019, as higher costs took a toll on the company’s bottom line.
Revenues for the quarter, at USD 41.2 million (EUR 36.7 million), were basically flat when compared to the same quarter of 2018, but costs of goods sold increased 9 percent year-over-year to USD 35.3 million (EUR 31.5 million). That was due, according to the company, to smolt elimination and costs of smolts sold; administration costs which jumped 76 percent to USD 3.5 million (EUR 3.1 million) – which Nova Austral attributed to “legal advice costs;” and fair value adjustments surged 387 percent to a loss of USD 1.5 million (EUR 1.3 million) due to lower prices in in the fourth quarter of 2019 versus the same quarter of 2018.
“As we put last year’s events behind us, the focus going forward will be to steer the company through its pending legal and regulatory matters, but more importantly continuing the journey towards the vision of being an industry leader in sustainable farming, and a pioneer in the Chilean salmon farming sector,” Nova Austral said in a financial report to the Oslo stock market.
In September last year, Chile’s Sub-Secretary of Fisheries and Aquaculture (Subpesca) cut Nova Austral’s production permits after it was discovered the company provided false mortality figures to regulators. Further, social unrest and violence in Chile that flared up in October affected key parts of the economy, including salmon production and exports, as workers went on strike, ports and airports were closed and protesters blocked key highways.
Together with the strikes, adverse weather conditions affected Nova Austral’s harvesting which reached 21,600 metric tons (MT) for the year, below its established estimate of 23,200 MT for 2019.
The company said stocking reached 1.8 million smolts, mostly affected by delays in stocking permits and penalties levied from Subpesca in response to Nova Austral’s misreporting. The salmon farmer will look to speed up the process in the first quarter of 2020 and reach the end of the year at 7 million smolts.
Nova Austral highlighted the February announcement regarding its joint venture with fellow salmon farmer Trusal, a subsidiary of Salmones Austral.
“This is an important step forward in the development of the company, as it provides additional opportunities to produce high-quality salmon in the Magallanes [region] … It allows the company to utilize its resources to strengthen the value and the future cash flow generation of the company.” The joint venture has expected harvests of 19,000 metric tons (MT) during two production cycles – 7,000 MT during 2021 and 12,000 MT in 2022.
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.
