The cancelation of Peru’s anchovy fishing season earlier this year led to Austevoll Seafood posting significantly lower operational earnings in Q2 2023, but the group’s performance elsewhere helped stem the damage.
Delivering the group’s results for Q2 2023, Austevoll Seafood CEO Arne Møgster said it had been “quite a decent quarter” despite the drop in operational EBIT, highlighting the posting of record revenue.
The firm’s quarterly operating revenue increased 8 percent year over year to a record NOK 8.452 billion (USD 796.9 million, EUR 733.4 million), with the growth mainly coming from its farming companies. The company attributed the growth to strong prices partly due to a weak Norwegian krone.
Regarding its pelagic operations in Peru, Møgster said the warmer temperatures off the coast of Peru started in late March this year due to the impacts of El Niño, and with just two short exploratory fishing excursions allowed to catch fish – comprising only five days in June and 10 days in August – volumes were “extremely limited” in the second quarter.
Møgster said with just 10,375 MT of raw materials handled in the quarter, compared to Q2 2022’s 234,657 MT, it had been a “very slow season and the reason why we had negative earnings in this quarter compared with a very successful second quarter [in] 2022.”
The warm conditions are likely to remain until November, according to Møgster, but Austevoll’s expectation is that the El Niño weather pattern will weaken to a moderate degree between December 2023 and March 2024.
“It’s difficult to predict the quota for the next season, but we have seen similar periods with moderate and weak El Niños. One [was] in 2016 when the quota was up at 2 million MT. The year after we had a weak El Niño, and the quota was at 1.5 million MT. The year after that was also a weak El Niño, and that was again 2 million MT,” Møgster said. “We are expecting that there will be a season in the second half [of this year], but it’s difficult to predict what the volume will be.”
Austevoll’s Q2 2023 report also highlighted that inflation over the past year brought higher selling prices for its products, but also drove up virtually all of its material costs. In the quarter, Austevoll’s operating profit after fair-value adjustment of biological assets and income from joint ventures and associates totaled NOK 992 million (USD 93.5 million, EUR 86.1 million), down from NOK 2.4 billion (USD 226.3 million, EUR 208.3 million) in Q2 2022. Its profit before tax amounted to NOK 857 million (USD 80.8 million, EUR 74.4 million), compared to over NOK 2.2 billion (USD 207.4 million, EUR 191 million) in Q2 2022.
The group posted a loss of NOK 1.139 billion (USD 107.4 million, EUR 98.9 million) for H1 2023. This included the implementation of the Norwegian government’s new 25 percent resource rent tax on earnings from the sea-based production of salmon and trout. Austevoll has estimated the cost effect of the tax on its balance sheet to be NOK 1.8 billion (USD 169.7 million, EUR 156.2 million).
The tax has affected all Norwegian seafood companies since Q2 began, despite most of these organizations recording record profits in the period.
Austevoll’s operational revenue and operational EBIT for the first six months of the year amounted to NOK 16.5 billion (USD 1.6 billion, EUR 1.4 billion) and NOK 2.2 billion, respectively. In H1 2022, the company posted an operational revenue of NOK 14.4 billion (USD 1.4 billion, EUR 1.2 billion) and operational EBIT of NOK 2.6 billion (USD 245.1 million, EUR 225.7 million).
Last week, Lerøy Seafood delivered its Q2 2023 results, revealing an operational EBIT of NOK 950 million (USD 89.6 million, EUR 82.5 million) in Q2, up 2 percent year over year. Møgster said there had been a “good underlying performance” at Lerøy Seafood’s Aurora operations in Troms and Finnmark and Lerøy Midt in Nordmøre and Trøndelag, but that the biological performance at Lerøy Sjøtroll in Vestland was weak. Møgster said the performance of Lerøy’s fishing and processing businesses had been “very good,” particularly when factoring in that cod volumes were lower than last year.
Photo courtesy of Austevoll Seafood
