Punta Arenas, Chile-based salmon farmer Nova Austral posted a net loss of USD 11.4 million (EUR 10.6 million) in the first quarter of 2022, an improvement from the loss of USD 15.2 million (EUR 14.1 million) it saw in the same period in 2021.
Revenues decreased by 24 percent in Q1 2022 to USD 19 million (EUR 17.7 million) versus the USD 25 million (EUR 23.3 million) posted in Q1 2021, mainly due to a 41 percent drop in volumes sold, coming in at 1,900 metric tons (MT) whole fish equivalent (WFE) lower. This was partially offset by 25 percent higher average prices per kilogram WFE, although it was unable to take full advantage of surging prices “due to the existence of an important number of contracts that have fixed prices,” the company said.
“Our prices will remain at high levels during 2022 due to new contracts that have been agreed with better average prices,” Nova Austral said in its earnings release.
During the quarter, the cost of goods sold decreased 42 percent to USD 19.5 million (EUR 18.2 million) in line with the volume reduction, bringing a gross loss of USD 500,000 (EUR 460,000).
Fair value adjustments of USD 9.2 million (EUR 8.6 million) – thanks mostly to an 842 MT increase in biomass – lifted Nova Austral into positive territory for EBIT, which reached USD 3 million (EUR 2.8 million), versus an EBIT loss of USD 6.5 million (EUR 6 million) in Q1 2021.
In Q1 2022,, the U.S. remained Nova Austral’s primary market with a 68 percent share of sales, which the company attributed to its commercial focus on fresh products and frozen portions. It said that it expects the U.S. and Europe – which represented 13 percent of sales in Q1 2022 – to remain its main markets, and that cargo flights from Santiago, Chile to Miami, Florida; New York City; and Los Angeles, California continued operating normally, and that its use of sea transportation has continued without disruption, though cost increases from September onwards have hit the company's bottom line.
“We expect such costs to remain at these levels during the next year,” the firm said.
The company also provided updates on its joint operations with other salmon farmers. It has a concession leased from Australis at the Skyring 2 grow-out center, but said that it faced very poor weather conditions that prevented the proper feeding of fish at the farm, while also having to deal with sea lion attacks during March and April. As such, Nova Austral decided to perform an early harvest of the site, with volume coming in at 500 MT, versus the 2,400 MT originally planned. These lease contracts will be finalized and Nova Austral said it will not operate the site any longer.
Similarly, in November 2021, Nova Austral decided to close its Skyring 3 site due to similar negative conditions. It said at the time the closure would result in a Q4 2021 financial impact of USD 4.1 million (EUR 3.8 million) and approximately 4,000 MT less in harvested volumes in 2023.
Regarding its joint venture with Trusal, Nova Austral said that both sites currently in operation – Navarro 2 and Isla Juan – are operating according to plan. Harvesting of Navarro 2 began in May 2022 and is expected to be completed in October, while harvesting at the Isla Juan site will begin between November 2022 and January 2023. Navarro 3 will be stocked again in Q2 2023, it said.
The company has received Aquaculture Stewardship Council (ASC) and 4-star Best Aquaculture Practices (BAP) certificates for Navarro 2, which is the site it started harvesting in May and will continue harvesting until October. During the last 12 months, 94 percent of the biomass harvested at its sites was ASC-certified and 100 percent had BAP certification.
Nova Austral said its hatchery is operating normally, delivering around 1.4 million smolts during Q1 of this year. The use of its own smolt in its operations remains in the 70 to 80 percent range, but Nova Austral said it expects to begin fully stocking all of its farms in Chile with smolt sourced from its hatchery beginning in Q4 2022.
In May 2022, Nova Austral appealed a CLP 1.32 billion (USD 1.52 million, EUR 1.47 million) fine levied against it for five infractions reportedly committed in 2017 at its Aracena-19 salmon grow-out center. The sanctioning procedure was initiated in September 2021 by the Superintendency of the Environment (SMA), following a claim filed by the regional director of Sernapesca, Chile’s fisheries and aquaculture service. According to information from the Third Environmental Court of Valdivia, to which Nova Austral is appealing the fine, four of the infractions are related to the inadequate management of mortalities and solid waste; breaches of certain measures associated with contingency prevention and management; and problems associated with the silage platform – all classified as minor.
However, the fifth infraction, a failure to deliver daily mortality control logs for the second productive cycle, supervised by the SMA, is considered a serious offense.
