Reduced salmon prices and a challenging quarter for its farming operations in northern Norway led SalMar to deliver total operational earnings before interest and taxes (EBIT) of NOK 613.5 million (USD 67.5 million, EUR 61 million) in the third quarter of this year, down from NOK 939.1 million (USD 103.3 million, EUR 93.4 million) in Q3 2018.
The Frøya, Norway-headquartered salmon farming group generated gross operating revenues of just under NOK 2.8 billion (USD 307.9 million, EUR 278.4 million) in Q3 2019, which was on par with the corresponding quarter of last year. Its EBIT per kilogram in this period was NOK 17.12 (USD 1.88, EUR 1.70), which was NOK 8.91 (USD 0.98, EUR 0.89) less than a year previously.
SalMar harvested 35,800 metric tons (MT) of salmon during the past months, some 300 MT less than in Q3 2018 MT. In addition, Norskott Havbruk (Scottish Sea Farms) harvested a total 10,000 MT, compared with 8,100 MT in Q3 2018. SalMar owns 50 percent of Norskott Havbruk.
“For the SalMar Group, the third-quarter was a mixed experience. Central Norway posted satisfactory results, in line with our expectations. Sales and Processing achieved good results on the back of efficient operations and a good allocation of volumes in a challenging period with declining prices. However, Northern Norway’s performance was very weak,” SalMar CEO Gustav Witzøe said.
Fish Farming Central Norway harvested a total of 28,100 MT of salmon in the last quarter, compared with 32,900 MT in the corresponding period of last year. As a result of the reduced volume harvested, as well as lower prices, this unit’s operating revenue decreased to less than NOK 1.6 billion (USD 176 million, EUR 159.1 million) for the quarter. The EBIT per kilogram gutted weight was NOK 19.35 (USD 2.13, EUR 1.92), down from NOK 26.45 (USD 2.91, EUR 2.63) in Q3 2018.
Its Fish Farming Northern Norway segment harvested 5,400 MT of salmon, which was 2,200 MT more than in the corresponding quarter of last year. As such, it generated gross operating revenues of NOK 275.4 million (USD 30.3 million, EUR 27.4 million) in the quarter, up from NOK 175 million (USD 19.3 million, EUR 17.4 million) in Q3 2018.
But in its third-quarter report, SalMar said that the result from Fish Farming Northern Norway was “very weak” and this was due to previously announced biological challenges with the generation of fish transferred to the sea in spring 2018.
“Illness and the risk of illness has led to fish being harvested earlier than planned," the report said. "This has had a negative effect on both price achievement and costs. A low volume harvested in the quarter also resulted in higher fixed costs per kilogram.”
Consequently, the segment’s EBIT per kilogram came to NOK 1.08 (USD 0.12, EUR 0.11), down from NOK 16.18 (USD 1.78, EUR 1.61) for the same period last year.
Arnarlax, which is Iceland’s largest producer and processor of farmed salmon, harvested around 2,300 MT of salmon in the last quarter, compared with 1,200 MT in Q3 2018. Operating revenues for the quarter totaled NOK 152.3 million (USD 16.8 million, EUR 15.1 million), compared with NOK 68.8 million (USD 7.6 million, EUR 6.8 million) for the same period of last year. Its EBIT per kilogram gutted weight was NOK 9.54 (USD 1.05, EUR 0.95), a substantial improvement from the loss of NOK 27.05 (USD 2.98, EUR 2.69) per kilogram posted for Q3 2018.
In the first quarter of 2019, SalMar increased its holding of shares in Arnarlax to over 50 percent.
SalMar’s Sales and Processing segment generated slightly higher revenues of NOK 2.7 billion (USD 296.9 million, EUR 268.4 million) in the quarter, down from NOK 2.8 billion (USD 307.9 million, EUR 278.3 million) in Q3 2018. Its operational EBIT of NOK 102.3 million (USD 11.2 million, EUR 10.2 million) was up on Q3 2018’s NOK 73.1 million (USD 8 million, EUR 7.3 million).
A total of 28,500 MT was harvested at InnovaMar during the period, compared with 44,400 MT in Q3 2018. The contract rate for the third quarter was 25 percent.
SalMar expects to harvest a total 145,000 MT of salmon in Norway in 2019, increasing to 152,000 MT in 2020. In Iceland, it has projected a 10,000 MT harvest this year and next year.
Meanwhile, in October, SalMar announced the establishment of offshore fish farming subsidiary SalMar Ocean AS. This new company is led by SalMar’s former, CEO Olav-Andreas Ervik.
“In SalMar, we are always looking for possibilities to improve our operational performance,” Witzøe said. “Through the creation of SalMar Ocean, we aim to coordinate and strengthen our efforts within offshore fish farming. We see a significant potential within offshore fish farming and by doing this we want to maintain our leading position in this area both with relation to technological developments and biological production. This will contribute to an environmentally sustainable development of Norwegian aquaculture industry in the years to come.”
Image courtesy of SalMar
