Rapid price increases seen across all its business areas has Iceland Seafood International (ISI) expecting to post a H1 2022 loss before tax of EUR 1.8 million (USD 1.8 million).
In its draft results statement for the six-month period spanning January to June 2022, the Reykjavik, Iceland-headquartered seafood firm said its Northern European value-added business has been especially impacted by price increases, as it mostly relies on sales to retail customers – where it takes more time to pass on price increases to customers than in foodservice.
ISI said sharp salmon price increases affected its results in Ireland in the period, but it was able to pass the cost increases on to customers. With prices now leveling off, ISI said it expects the performance of its Irish operations to return to normal levels in Q3 2022.
The company’s U.K. business is stuggling, however, the company said. According to its statement, the operation was loss-making in the period, and will “take longer and cost more” than previously estimated to stabilize. ISI said the outbreak of the omicron variant of COVID-19 at the start of the year has had an ongoing disruptive impact on both operations and logistics in the U.K., alongside price increases for many of its inputs.
Former Hilton Seafood Production Director Glen Mathews was appointed as managing director of ISI's U.K. operations in February 2021 following the departure of Danny Burton, who had served in the position since March 2020.
“The new but experienced management team is stabilizing the operation; Key tasks are to rectify sales prices and to grow the business with both current and new customers. Based on [the] current outlook, it is expected that operation will be loss-making during H2 2022, but that breakeven level will be reached in H1 2023,” it said.
Despite its challenges in the U.K. and Northern Europe, ISI posted a positive performance in both its Sales and Distribution and the Value-Added Southern Europe divisions continued in the period.
“IS Iberica performed especially well, helped by our strong market position in Southern Europe. The demand for both cod products from Iceland and Argentinean shrimp was good in the period, resulting in both strong sales and margins. The operation of Ahumados Dominguez was negatively impacted by the sharp price increase of salmon, especially in Q2,” the company said. “But as in Ireland, the performance of Ahumados Dominguez is expected to be back to normal levels from Q3.”
Based on revised business forecasts for the reminder of the year, and especially the situation in the United Kingdom, ISI's outlook range for normalized profit before has been amended to EUR 9 million to EUR 14 million (USD 9.2 million to USD 14.3 million) from the previous outlook range of EUR 11 million to EUR 16 million (USD 11.3 million USD 16.4 million).
ISI will publish its 1H 2022 results after markets close on 17 August, 2022.
In H1 2021, it reported a normalized profit before tax of EUR 4.8 million (USD 4.9 million).
Photo courtesy of Iceland Seafood International
