Soaring salmon prices led to a difficult opening quarter for Iceland Seafood

Iceland Seafood International CEO Bjarni Ármannsson discussing the cmopany's results.

High inflation and input costs combined to negatively affect the Q1 2023 results of Reykjavik-headquartered Iceland Seafood International (ISI).

In particular, the high price of salmon in the period impacted ISI’s operations in Ireland and Spain, while the up-for-sale business in the United Kingdom, Iceland Seafood U.K., continues to dent the company’s income, according to ISI CEO Bjarni Ármannsson.

ISI saw its total group sales rise 23 percent year-over-year to EUR 123.1 million (USD 135 million), driven by positive sales numbers within both its Value Added Southern Europe (VA S-Europe) division and Sales & Distribution (S&D) division, especially in the pre-Easter period. 

VA S-Europe’s sales for the quarter totaled EUR 66 million (USD 72.4 million), an increase of 22 percent from last year. The division’s normalized profit before tax of EUR 1 million (USD 1.1 million) was EUR 1.6 million (USD 1.8 million) down compared to Q1 2022.

March was a record sales month for Iceland Seafood Iberica, driven by solid sales of both cod products and Argentinian shrimp. The latter was largely thanks to a 70 percent production volume increase. However, the division's margins suffered from challenging market situations and a decrease in sales prices, the company reported.

Ármannsson confirmed the steep increase in salmon prices made the quarter a difficult one for ISI's Ahumados Dominguez business. He said the company is taking action to further integrate the subsidiary's operations with IS Iberica, which he said should reduce costs and improve efficiency.   

With Iceland Seafood U.K. classified as an asset held for sale, the Value Added Northern Europe (VA N-Europe) division consists solely of the Oceanpath operation in Ireland. For this business, high salmon prices offset the impact of the quarter’s lower sales volume, leading to a slight growth in sales.

Consequently, its loss before tax was EUR 200,000 (USD 219,000) compared with EUR 400,000 (USD 438,000) a year previously. ISI said its outlook for the remainder of the year is good, as salmon prices are likely to stabilize at a lower level than their previous highs.

Meanwhile, the U.K. division’s loss of EUR 2.5 million (USD 2.7 million) was in line with the company's budgeted expectations for the period. Ármannsson confirmed ISI has measures to improve U.K. division's operations, but acknowledged it has seen its volumes hit by substantial increases in consumer prices in the U.K. market. As such, ISI’s revised management is assuming it won’t reach positive earnings before interest and taxes (EBIT) until Q4 2023. It has, therefore, forecast a ... 

Photo courtesy of Iceland Seafood International

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